HCI HAMMONIA SHIPPING AG Annual Report 2009

Transcription

1 HCI HAMMONIA SHIPPING AG Annual Report 2009

2 HCI HAMMONIA SHIPPING AG Annual Report 2009 Basic Data Basic Data Ship portfolio Vessel Date of acquisition Capacity in TEU Year of construction MS "SAXONIA" 03 / 12 / , MS "WESTPHALIA" 03 / 12 / , MS "HAMMONIA POMERENIA" 29 / 11 / , MS "HAMMONIA FIONIA" 29 / 04 / , MS "HAMMONIA DANIA" 06 / 05 / , MS "HAMMONIA HAFNIA" 16 / 05 / , MS "HAMMONIA HOLSATIA" 21 / 05 / , MS "HAMMONIA TEUTONICA" 06 / 06 / , MS "HAMMONIA MASSILIA" 20 / 10 / , MS "HAMMONIA ROMA" 05 / 01 / , MS "HAMMONIA BAVARIA" 05 / 01 / , Key financial indicators in EUR Change in % Vessel operating result 42,639 32, % Result from shipping operations 40,583 30, % Earnings before interest and taxes (EBIT) 13,449 16,844-20% Consolidated net result for the year - 2,752 9, % Cash flow from operating activities 22,457 24,989-10% Cash flow from investing activities - 52, ,901-83%

3 hammonia jork (charter name MSC Valencia) 8,200 TEU container ship, managed by HAMMONIA Reederei GmbH & Co. KG HCI HAMMONIA SHIPPING AG Annual Report 2009

4 HCI HAMMONIA SHIPPING AG Annual Report 2009 Contents Contents Short Portrait 1 Welcome Address 2 The Company 5 Business objectives and strategy 5 Business model 5 The share 7 Consolidated Management Report 9 key business conditions and general framework 9 Profit and loss, financial position and assets and liabilities of the group (according to IFRS) 12 Non-financial performance indicators 15 Subsequent events 15 Risks and opportunities 16 Outlook 18 Basics of the remuneration system 19 Profit and loss, financial position and assets and liabilities of the holding company HCI HAMMONIA SHIPPING AG 19 Reporting in accordance with Sections 289 (4), 315 (4) HGB 20 Statement on corporate governance 21 Corporate governance report 22 Consolidated Financial Statements 28 Consolidated income statement 28 Statement of comprehensive income 28 Consolidated balance sheet 29 Consolidated cash flow statement 30 Consolidated statement of changes in equity 31 Consolidated statement of changes in non-current assets 32 Notes to consolidated financial statements 36 Responsibility statement 76 Auditor s Report 77 Annual Financial Statements 79 Supervisory Board Report 83 Financial Calendar / Contact / Imprint 85

5 Short Portrait HCI HAMMONIA SHIPPING AG Annual Report 2009 HCI HAMMONIA SHIPPING AG The business concept of HCI HAMMONIA SHIPPING AG is focused on the acquisition, operation and sale of merchant ships. Its emphasis is placed on up-to-date container ship tonnage. The current fleet of HCI HAMMONIA SHIPPING AG includes eleven container vessels of the 2,500, 3,100 and 7,800 TEU classes. As a management holding company in the legal form of a listed corporation, HCI HAMMONIA SHIPPING AG holds interests in shipping companies in the legal form of limited partnerships with a limited liability company as general partner (GmbH & Co. KG) which are the owners of the respective vessels. HCI HAMMONIA SHIPPING AG is merely an asset holder, i. e. the company has no employees. All services are provided by means of outsourcing. The shipping companies are managed by HCI HAMMO- NIA SHIPPING AG together with HAMMONIA Reederei GmbH & Co. KG. HAMMONIA Reederei GmbH & Co. KG attends to all responsibilities in connection with the actual operation of all ships. The shipping companies provide the ships charterers with fully equipped, operational and manned vessels. According to the business model of HCI HAMMONIA SHIPPING AG, the ships are chartered out to liner trade companies with high credit ratings for long terms and / or proceeds are pooled with those of other ships of the same size in order to safeguard revenues against fluctuating charter rates and the risk of a ship s discontinued operation. The pools are managed by the renowned shipping company Peter Döhle Schiffahrts-KG. The expansion of the fleet of HCI HAMMONIA SHIPPING AG announced in the context of the company s IPO has been completed for the time being with the delivery of the vessels MS HAMMONIA ROMA and MS HAMMONIA BAVARIA at the beginning of January There is no commitment to the acceptance of additional ships. However, the authorized capital increase of EUR 68.2 million provides HCI HAMMONIA SHIPPING AG with the option of a further expansion of the fleet. Particularly in the difficult current market environment, opportunities may arise for the acquisition of vessels at favorable conditions. Due to the structure of HCI HAMMONIA SHIPPING AG, the specific advantages linked to the shipping companies legal form of the GmbH & Co. KG, e. g. the so-called tonnage tax, are maintained. At the same time, HCI HAM- MONIA SHIPPING AG taps the capital market as a funding source for future corporate growth. By the stock exchange listing, new investor groups without any previous access to an investment in shipping companies can be addressed. Prospectus / actual comparison AG vessels 01 / / 12 / 2009 Prospectus 01 / / 12 / 2009 Actual 1) 01 / / 12 / 2009 Difference actual vs. prospectus Figures in EUR 000 USD 1.30 per EUR 1 USD per EUR 1 Charter revenues 67,651 62,254-8 % Operating costs & other expenses - 23,471-23,515 Other operating income 0 1,844 EBITDA 44,180 40,583-8 % Depreciation and amortization - 16,374-27,134 EBIT 27,806 13, % Interest income - 18,041-15,840 Income taxes Net income 9,323-2, % Earnings per share EUR 68 EUR % Off-hire periods 77 days days 2) - 49 % 1) Stated actuals are based on actually acquired ships and actual dates of delivery as compared to the business scenario published in the stock exchange prospectus. 2) There were no unscheduled off-hire periods in addition to scheduled off-hire days. 1

6 HCI HAMMONIA SHIPPING AG Annual Report 2009 Welcome Address 1 Welcome address Dear shareholders and business associates, your company, HCI HAMMONIA SHIPPING AG, is well positioned in order to overcome one of the most severe shipping crises of the last 50 years. Container shipping is experiencing a serious crisis due to the coincidence of a historically unique drop in demand and a historically unique high level of new order volumes. The credit crunch that started with the subprime mortgage crisis and peaked with the collapse of Lehman Brothers and other banks in the U. S. and the necessary government-controlled rescue of various European banks, led to a considerable decrease in consumption in the large national economies of Northern America and Europe. Accordingly, shipping demand for containerized goods went down signifi cantly. The worldwide container turnover went down roughly 9 % in the year Against the backdrop of rapid economic growth and favorable fi nancing options, in the previous years capacities had been ordered in line with anticipated growth beyond 10 % p. a. Even though the global container vessel fl eet grew in 2009 only by 7 % due to considerable delays of delivery and a number of cancelations, the result was a substantial under-utilization of the available capacity. Apart from a less intensive utilization of ships in operation, many ships have been taken out of operation altogether, so that during the peak of the crisis about 11 % of all vessels were without operation. This surplus of capacity supply equally affects tramp owners and liner shipping companies as many of the tramp owners orders for new constructions are based on the long-term charters commissioned by liner shipping companies, thus ultimately representing off-balance fi nancing transactions of the liner shipping companies. However, liner shipping companies try to reduce capacities and therefore return ships to tramp owners upon the expiry of Dr. karsten Liebing Member of the Management Board jan krutemeier Member of the Management Board 2

7 Welcome Address HCI HAMMONIA SHIPPING AG Annual Report 2009 respective charters so that the balance is shifted on account of the chartered fleet. As the medium-sized ships (2,000 to 3,000 TEU) have rather short charter terms and the liner shipping companies use either their own or longterm chartered bigger tonnage for the traditional services of the Sub-Panamax container vessels at the same time, those 2,000 to 3,000 TEU container ships are replaced in part. Therefore the share of non-operated ships was the highest in this class with up to about 20 %. Many tramp owners are ready to charter out their ships at charter rates that correspond with the vessels operating costs because docking them would lead to additional costs. Currently the prospects are slowly improving again. Freight demand has increased and the liner shipping companies freight rates have reached a profitable level again. The liner shipping companies register profitable business operations once more after having recorded cumulative losses of about USD 15 billion in the year Since mid-2008 no new container vessels have been ordered so that even additional charter capacities are compensated by increasing demand. The rate of non-operated container ships has decreased to about 9 % altogether. However, in view of this still very high number, a balanced market and thus profitable charter rates cannot be expected for at least the next 12 to 24 months. Considerable burdens result for liner shipping companies and tramp owners from the new constructions ordered in recent years and scheduled for delivery in the years 2010 and In view of the ships purchase prices that are high compared to current charter rates, banks partly refuse payment of originally scheduled credit line volumes so that additional equity is required. This leads to solvency problems for various liner shipping companies and tramp owners. This scenario has the following implications for HCI HAM- MONIA SHIPPING AG: The fleet has been completely delivered and fully financed since the beginning of There are therefore no financing risks in connection with new constructions. Profits are determined by solid revenues of the three ships chartered out under long-term agreements. However, the pool-operated ships could not escape the market development. Yet the deterioration of charter rates was much more moderate especially in the 2,500 TEU pool. This was primarily due to the fact that the pool managed by Peter Döhle Schiffahrts-KG kept the share of non-operated ships much lower compared to the overall market. With regard to expenses, the operator promptly and successfully implemented a temporary cost cutting scheme in response to declining revenues. In comparison to the original budget, savings of roughly EUR 3.3 million (without exchange rate effects) were thus achieved. However, reductions of crews and maintenance efforts are technically justifiable only for a limited period of time. After that, the return to normal crew sizes will be aimed for in order to be able to further guarantee the sound technical condition the ships are in. Not least because of the cost cutting scheme, the company s operating result continues to be positive. However, the valuation of the fleet at market values and risk-carrying charter receivables from two liner shipping companies lead to considerable provisions for impairment so that the net result for the year 2009 is altogether negative. If, with respect to those two liner shipping companies, the debtors insolvency can be prevented by suited restructuring agreements, as has been the case with CSAV or CCNI before, these provisions for impairment can be reversed soon, though. We are expecting a difficult year With regard to the pool-operated ships, we will have to come to repayment extension agreements with the financing banks for the years 2010 and The meetings with the financing banks are constructive despite the strained situation of some of the banks so that we are expecting to arrive at agreements soon. By this and the other adjustments mentioned, the company s solvency should be secured through the crisis from today s perspective. 3

8 HCI HAMMONIA SHIPPING AG Annual Report 2009 Welcome Address In our opinion the current crisis also provides considerable opportunities. Due to the emergencies of many owners, ships can be acquired at highly favorable conditions by long-term comparison, either from banks for balance sheet relief of from liner shipping companies for the generation of liquidity. We assume that we may manage to acquire ships at low purchase cost and without a strain on the liquidity of the AG. Thus the fleet s total capacity could be reduced in price and the future profit potential could be sustainably improved. For the fleet s reduction in price and securing the company s liquidity, it is necessary to make raising capital more flexible. This requires a decrease of subscribed capital in favor of the capital reserve in order to have more flexibility in determining the issue price of new shares. For the acquisition of new ships, a capital increase against contribution in kind is an appropriate option, enabling the company to pay part of the purchase price in stock. As the remaining period of the crisis cannot be determined, we also deem it advisable for reasons of commercial precaution to be able to secure the company s liquidity by the issue of new shares as well, even though such a measure does not seem necessary from today s vantage point. A detailed presentation of measures will be included in the invitation to the Annual General Meeting. Based on the existing structure of ship operation and the adjusting measures so far implemented, the company holds a solid position, well prepared to overcome one of the greatest crises in container shipping ever. The other steps that have been mentioned lay the foundation for safeguarding long-term growth and sustainable profits in this industry determined by cycles. Hamburg, 15 April 2010 Dr. Karsten Liebing Member of the Management Board Jan Krutemeier Member of the Management Board 4

9 The Company HCI HAMMONIA SHIPPING AG Annual Report The Company 2.1 Business objectives and strategy Attractive return on our shareholders investment HCI HAMMONIA SHIPPING AG aims at generating an attractive and sustainable return for our shareholders. Value enhancement potential for the share is intended to be created in the medium and long term. With its fleet of upto-date seagoing vessels and its operation with qualified personnel, HCI HAMMONIA SHIPPING AG is on the right course to positioning itself on the shipping markets as a reliable supplier of high-quality transport capacity. Additional return opportunities are provided by the focused utilization of cyclical market fluctuations with regard to the purchase and sale of vessels. Focus on the container shipping industry HCI HAMMONIA SHIPPING AG focuses its ship investments on the segment of container shipping. Over the past 20 years, the worldwide container turnover has recorded annual growth rates of more than 10 %. The increasing international division of labor in the course of the liberalization of trading and the decentralization of production processes led to a disproportionate growth of the global trade, roughly 98 % of which is handled by means of seagoing vessels. Container shipping is the one industry to benefit the most from the rising volume of the movement of goods. For the first time in container shipping history, the year 2009 brought a decrease in turnover rates. However, over the past few months a recovery of the global economy became noticeable again. In the medium and long term, the international division of labor will continue to increase, thus leading to sustainable growth in container turnover. On the demand side, goods are gaining in importance for whose transport containers are ideally suited. On the supply side, the considerable expansion of the container vessel fleet and the faster loading and unloading of container ships are crucial factors as shorter periods of lay days spent in ports are thus made possible. These general growth drivers of maritime trade are not suspended by economic fluctuations but cushioned temporarily at most. Professional management The business activity s success is influenced essentially by the access to attractive investment targets. This is assured among other aspects by the business relationships forged over many years by the Management Board and the operator, HAMMONIA Reederei GmbH & Co. KG, the industry know-how of the service company, HCI Hanseatische Schiffsconsult GmbH, and the good access to the charter markets of Peter Döhle Schiffahrts-KG, managing the operation of the ships and serving as pool manager at the same time. The financing of the fleet of HCI HAMMONIA SHIPPING AG shows a solid capital structure of 30 % equity and 70 % borrowed capital. The equity was generated by the cash inflow from the capital increase within the framework of the IPO of HCI HAMMONIA SHIPPING AG. Borrowed capital has been provided for the long term by ship-financing banking institutions. About two thirds of the borrowed capital is subject to medium-term interest rate hedging. 2.2 Business model Market opportunities The growing world population, the increasing globalization and international division of labor as well as the transformation of previous developing and emerging nations into industrial nations have resulted in a steady increase of global trade volumes in the past years. The average annual growth rate of the global container trade was close to 10 % for the period from 1982 through Despite the decrease in global trade due to the economic crisis, we assume that container turnover will return to its former growth path in the next years. Similar to the development in international aviation, structures are evolving in maritime trade that involve large container ports of transshipment (so-called hubs), being supplied with a growing share of containers by feeders (feeder traffic). Cargo is then reorganized and sent up to other hubs or the actual ports of destination (hub & spoke concept). The driving forces behind this structure and the rising share of transshipment are the cost advantages of larger container vessels used in intercontinental trade as well as the increasing degree of containerization even in smaller ports. 5

10 HCI HAMMONIA SHIPPING AG Annual Report 2009 The Company Corporate structure, ship portfolio and management The ship portfolio currently comprises eleven container ships of the classes Sub-Panamax, Panamax, and Post- Panamax with a total capacity of 44,892 TEU. The six ships of the Sub-Panamax class are used on Far Eastern routes. The Panamax ships WESTPHALIA and SAXONIA also service the Far Eastern routes whereas the three Post-Panamax ships run on the transpacifi c routes. The ships are operated exclusively by HAMMONIA Reederei GmbH & Co. kg. Ship operation includes all business and legal transactions, from the ships supply with lubricants, spare parts, consumables, and equipment to manning and maintenance up to payment transactions and the closing of necessary insurance contracts. Special emphasis is placed on the conservation of the ships value by applying high quality requirements to all measures of maintenance and repair. A good, above-average technical state of the vessels means increased desirability on the charter and second-hand markets. The shipping trade is a cyclical business with partly high volatility on the charter markets as well as the sale and purchase markets. In order to attain as steady revenues from chartering out the ships as possible, the volatility of the charter markets is counterbalanced by long-term charters and pool arrangements. The volatility of the sale and purchase markets, however, is intended to be used for the targeted generation of proceeds from the sale and purchase of ships. Structure of HCI HAMMONIA SHIPPING AG Investors Equity provided by institutional investors, e. g. insurance companies, banks, HAMMONIA Reederei HCI HAMMONIA SHIPPING AG Paid-in equity Investments Capital borrowed from banks 3,100 TEU MS SAXONIA & MS WESTPHALIA 7,800 TEU MS HAMMONIA FIONIA MS HAMMONIA HAFNIA MS HAMMONIA DANIA 2,500 TEU MS HAMMONIA POMERENIA MS HAMMONIA BAVARIA MS HAMMONIA ROMA MS HAMMONIA TEUTONICA MS HAMMONIA HOLSATIA MS HAMMONIA MASSILIA Operation PD 3,100 pool altogether 18 ships 10-year time charter with Maersk PD 2,500 pool altogether 55 ships 6

11 The Company HCI HAMMONIA SHIPPING AG Annual Report The share In the year 2008 the share still managed to hold its ground. It lost about 11% in fiscal year 2008 while the DAX went down close to 40 % in the period of comparison and the ShipInx even lost more than 55 % of its value. In the first quarter of 2009 the share performed in line with DAX and ShipInx. However, HCI HAMMONIA SHIPPING AG did not benefit from the recovery on the stock markets beginning in the second quarter, similar to comparable stocks of tramp shipping companies such as Danaos Corporation or Seaspan Corporation. Until August 2009 the share showed a sideward trend, and eventually a negative trend set in so that by the end of 2009 the share has lost more than 50 % of the price quoted at the beginning of the year. The share performance reflects the structural characteristics of shipping and the composition of the ShipInx. The ShipInx primarily includes liner shipping companies which benefited from rising freight rates in the second half-year and were thus able to present a positive picture to the investors. It is similar with DAX stocks. In many cases a substantial recovery was either noticeable already or at least foreseeable. The tramp shipping companies, i. e. ship owners that merely provide container tonnage without operating their own liner services, and HCI HAMMO- NIA SHIPPING AG among them, continue to suffer from the low charter rates and a low utilization of the container vessel fleet. Therefore a delayed recovery of the share price must be expected. Relative share price development of HCI HAMMONIA SHIPPING AG compared to selected stock indices In % Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 HCI HAMMONIA SHIPPING AG MSCI WORLD INDEX DAX ShipInx 1) 1) The Shiplnx index represents the performance of the 30 largest listed stocks by market capitalization in manitime trade. The base date of the ShipInx index is 20 September 2002, when the index started with 100 index points. 7

12 HCI HAMMONIA SHIPPING AG Annual Report 2009 The Company Due to its division into large stakes and the predominant placement with institutional investors with long-term investment horizons, the stock of HCI HAMMONIA SHIPPING AG has shown a low level of liquidity in stock exchange trading so far. Approximately 20% of the shares of HCI HAMMONIA SHIPPING AG are held by savings banks, Raiffeisen cooperative banks, and Volksbank cooperative banks, about 24% are held by insurance companies, some 30% are held by other banks, roughly 10% are held by HAMMONIA Reederei GmbH & Co. KG, and about 12 % are held by other institutional investors. The free float amounts to 4% of the shares. HCI HAMMONIA SHIPPING AG does not hold its own shares Key Data on the Share of HCI HAMMONIA SHIPPING AG WKN / ISIN Ticker symbol / Reuters / Bloomberg Type of shares A0MPF5 / DE000A0MPF55 HHX.HAM / HHX.DE / HHX.GR No-par common bearer shares Number of shares 136,414 Designated sponsors HSH Nordbank AG, Nord / LB Stock prices 2009 in EUR High (20 / 01 / 2009) Average Low (23 / 12 / 2009) Beginning of year (02/ 01 / 2009) Last (30 / 12 / 2009) Market capitalization (30 / 12 / 2009) EUR million 8

13 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report Consolidated management report 3.1 Key business conditions and general framework General information As a listed shipping holding company, HCI HAMMONIA SHIPPING AG has the legal form of a German stock corporation and is quoted on the regulated market of the Hanseatische Wertpapierbörse Hamburg (Hamburg Stock Exchange) and on the unofficial regulated markets of the other German stock exchanges. HCI HAMMONIA SHIPPING AG aims at establishing a fleet of up-to-date seagoing vessels and their operation in fastgrowing segments of the container shipping industry in order to generate a sustainable return for the shareholders. The group thus generates revenues from the operation of ships. Since January 2009 the entire previously scheduled fleet of altogether eleven seagoing vessels has been in service. As the controlling group company and the managing holding company, HCI HAMMONIA SHIPPING AG manages the respective subsidiaries individual ship investments. As of 31 December 2009, HCI HAMMONIA SHIPPING AG has direct investments in altogether twelve companies, with the following compulsory contributions of capital according to the respective articles of partnership: - MS SAXONIA Schiffahrts GmbH & Co. KG (EUR 10,226k) - MS WESTPHALIA Schiffahrts GmbH & Co. KG (EUR 10,226k) - MS HAMMONIA POMERENIA Schiffahrts GmbH & Co. KG (EUR 11,126k) - MS HAMMONIA HOLSATIA Schiffahrts GmbH & Co. KG (EUR 11,176k) - MS HAMMONIA MASSILIA Schiffahrts GmbH & Co. KG (EUR 11,326) - MS HAMMONIA TEUTONICA Schiffahrts GmbH & Co. KG (EUR 11,226) - MS HAMMONIA BAVARIA Schiffahrts GmbH & Co. KG (EUR 11,726k) - MS HAMMONIA ROMA S chiffahrts GmbH & Co. KG (EUR 11,326k) - MS HAMMONIA FIONIA Schiffahrts GmbH & Co. KG (EUR 17,000k) - MS HAMMONIA DANIA Schiffahrts GmbH & Co. KG (EUR 17,000k) - MS HAMMONIA HAFNIA Schiffahrts GmbH & Co. KG (EUR 17,000k) - Verwaltung HCI HAMMONIA Schiffahrts GmbH (EUR 25k) The above-mentioned investments and HCI HAMMONIA SHIPPING AG itself represent the entire group of companies included in the consolidated financial statements. The companies set up in the legal form of GmbH & Co. KG (limited partnership with a limited liability company as general partner) as so-called single-ship limited partnerships are the civil-law owners and operators of the respective ships. Verwaltung HCI HAMMONIA Schiffahrts GmbH serves as the limited partnerships personally liable partner (general partner) Business performance The fleet At the beginning of the year 2009, HCI HAMMONIA SHIP- PING AG took over the two new container ship constructions MS HAMMONIA ROMA and MS HAMMONIA BA- VARIA from the shipyard and commissioned them. The fleet size scheduled at the time of the IPO was reached with the acceptance of these last two vessels. In contrast to many comparable competitors, the group has no obligations to accept any more ships so that it is not exposed to any respective financing risks. Today the fleet of HCI HAMMONIA SHIPPING AG comprises altogether eleven up-to-date container ships. For all vessels there are long-term financing agreements with banking institutions established in the field of ship financing. All ships are either included in two size-specific pools managed by Peter Döhle Schiffahrts-KG or chartered out for long terms to liner shipping companies with high credit ratings. Three container vessels of 7,800 TEU each are chartered out to the world s largest and highly rated shipping company A. P. Moeller-Maersk until the year 2018 under binding charter agreements. The other ships are operated in pools managed by Peter Döhle Schiffahrts-KG. HCI HAMMONIA SHIPPING AG is therefore distinguished by a solid concept of operation. The combination of ship operation in pools on the one hand and long-term charters of ships on the other hand reduces the volatility of charter revenues and thus cushions the effects of the currently 9

14 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report very low charter rates. Another factor, this concept of operation virtually eliminates the risk of total loss of revenue from individual ships as any pool member receives the pool rate even if it is docked. This is a major advantage in times of a high share of non-operated ships; at the end of the year 2009 the rate was 11.6 % (Alphaliner-Idle ships distribution- as at 4th January 2010) for the entire container vessel fleet, even coming to 20.6 % for ships of 2,000-2,999 TEU (Alphaliner-Idle ships distribution- as at 4th January 2010). It also provides the opportunity to benefit from a positive market development. While the market rates for newly signed charter agreements were still free falling in the first half-year 2009, they were bottoming out in the second half of the year. For 2,500 TEU ships with cranes, the average charter rate was roughly USD 4,400 / day at a term of 6 to 12 months (Clarkson, Container Intelligence Monthly, March 2010). The annual average for such ships was about USD 5,400 / day (Clarkson, Container Intelligence Monthly, March 2010). For the 2,500 TEU ships of HCI HAMMO- NIA SHIPPING AG, the pool rates were USD 11,352 / day at the end of the year and USD 15,360 / day on annual average. Pool revenues are thus more than twice as high as charter rates realizable on the spot market. For 3,100 TEU vessels, charter rates came to about USD 5,000 / day at the end of the year (Clarkson, Container Intelligence Monthly, March 2010) and about USD 6,100 / day on annual average (Clarkson, Container Intelligence Monthly, March 2010). Respective pool rates were significantly above the charter rates realizable on the market as well, namely USD 8,785 / day at the end of the year and USD 11,975 / day on annual average. The restructuring of individual charterers of pool vessels was completed successfully so that these contracting parties can be regarded as reliable partners once again. Other liner shipping companies are still busy putting their finances in order; however, indicators signify that acceptable solutions for all parties involved will be found. There are currently no indications that new deficiencies from charterers should be worried about. Overdue receivables from two charterers in the amount of EUR 2.0 million have been fully impaired on the basis of reasonable commercial assessment. Ultimately it can be ascertained that the pool concept and the long-term charter agreements have substantially contributed to the stabilization of the fleet s cash inflow. Certainly the level of profitability at the end of the year is not satisfying; however, so far the operating expenses have been generated as well as the ships debt servicing. Yet some ships in the fleet of HCI HAMMONIA SHIPPING AG will have to draw on payment extensions in the future. The payment of interest will continue to be possible from today s viewpoint even on the basis of the currently very low level of charter rates. We are firmly convinced that the bottom has been reached and that a recovery of the charter market will begin in the near future. Visible indicators are the recovery of the real economy, which started in the second half-year 2009, and an increase in fright charters recorded by the liner shipping companies. If this trend keeps up, the charter rates will see a positive development as well. However, this trend would only have a delayed effect on the group s net result due to the pool concept. The operation of the fleet in service has been for the most part trouble-free; the charterers continue to be highly satisfied with the ships technical performance. Financing In the fourth quarter of 2009, the margin of the loans extended for the 7,800 TEU ships was adjusted. This measure was based on the opinion held by the bank consortium that an obligation stipulated by the credit arrangement, the observance of the so-called loan-to-value clause, had been violated. Even though HCI HAMMONIA SHIPPING AG does not share this opinion, it gave its consent to a temporary increase of the credit margin. In return, the banks agreed to a temporary waiver in respect to said loan-to-value clause and a legal dispute could be avoided in the first place. The burdens from the margin increase by 75 basis points roughly amount to altogether USD 1.5 million for a period of 12 months. This equals merely 16 % of the interest expense of the 7,800 TEU ships for the full year Cost cutting scheme At the beginning of the year 2009, a significant reduction in operating vessel costs, such as expenses for personnel, maintenance, lubricants, and insurance policies, was achieved. The implementation of safe manning brought about noticeable savings in personnel expenses. Safe manning represents the minimum crew size of a ship as determined by the respective flag state. For the year 2010 cost savings are scheduled at the same level. After that, the return to normal crew sizes will be aimed for in order to be able to further guarantee the sound technical condition the ships are in. In the year under review 2009, expenses of roughly EUR 3.3 million (without exchange rate effects) were saved in comparison with the budgeted figures. Miscellaneous Roughly 69 % of the share capital was represented at the Annual General Meeting held on 10 June All items on the agenda were accepted with high approval rates. The distribution rate for the year 2008 was reduced in favor of strengthening the equity base. 10

15 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 On 17 September 2009 HCI HAMMONIA SHIPPING AG announced that Jens Burgemeister, Management Board member of HCI HAMMONIA SHIPPING AG, would leave the company at his own request effective 31 December His departure from the company has the background that Mr. Burgemeister will also leave HCI Capital AG, the co-initiator of HCI HAMMONIA SHIPPING AG, to seek new professional challenges. As his successor, the Supervisory Board has appointed Jan Krutemeier. Mr. Krutemeier has many years of experience in the realm of ship financing and ship project development. He is also managing director of HCI Hanseatische Schiffsconsult GmbH. Management Board member Dr. Karsten Liebing, at the same time managing director of the operator HAMMONIA Reederei GmbH & Co. KG, will continue assuming his board responsibilities Market development Fortunately the recovery from the financial and economic crisis sets in faster than initially anticipated. The returning confidence on the financial markets, the expansive monetary policy, and the economic stimulus packages passed worldwide provided support to the real economy and led to a positive development in the second half-year Accordingly, the International Monetary Fund (IMF) now merely assumes a negative growth of 0.8 % for the worldwide economic performance in the year 2009 (IMF, World Economic Outlook Update, 26 / 01 / 2010). The crisis had a disproportionate effect on the global trading volume. It contracted by 12.3 % in the year 2009 (IMF, World Economic Outlook Update, 26 / 01 / 2010). Especially the slump in trade had severe consequences for the container shipping market: - The charter rates for container ships went down one third in the course of the year and thus came to roughly 85 % below the record highs reached in mid-2005 (Clarkson, Container Intelligence Monthly, March 2010) and adjusted for inflation rate 30 % below the lows recorded during the dot.com crisis of the year The cumulative losses incurred by the liner container shipping companies in the year 2009 are expected to come to USD 15 billion altogether. Reasons are the deterioration of the freight rates and the collapse of transport volumes. - Prices for used ships decreased roughly 40 % (Clarkson, Container Intelligence Monthly, March 2010) and thus reached the level of the year This equals a discount of about 70 % on the record highs of the year Over the year 2009 only few second-hand transactions involving container vessels took place. Ship owners mostly parted with their vessels only in cases of financial emergency. Buyers were granted borrowed capital by the ship-financing banks only to some extent. - The development of prices for new container ships cannot be determined as no ships were ordered from the shipyards in the year The demand for tonnage in the container shipping segment dropped about 9 % from the previous year 2008 (Howe Robinson Shipbrokers, Annual and Fourth Quarter Containership Review 2009). Apart from the lower demand, the supply situation also put the container shipping market under pressure. The high number of orders for Post-Panamax vessels in the year 2007 has its share of accountability for the fact that the capacity supply exceeds the demand. These orders have been placed or long-term chartered by more than 80 % from liner container shipping companies. By the end of the year 2009, orders for more than 4.7 million TEU filled the books; this equals roughly 36 % of the fleet of full container vessels in service worldwide (Alphaliner, Monthly Monitor, January 2010). At the peak in early 2008, this rate was even beyond 60 %. However, the situation did not develop quite as dramatically as feared one year ago. The growth of the container ship fleet in the year 2009 turned out only about half as high as still predicted at the beginning of the year. The reasons for this are cancelations and postponements of new constructions as well as the shipwrecking of older vessels. If this trend continues, it will have a positive effect on the demand / supply situation. With regard to the demand for shipping tonnage, the socalled slow steaming has a positive effect. Many liner shipping companies reduce the speed of the ships in service for cost considerations. In order to call at the respective ports of a liner service at the same frequency, more ships must be used, leading to increasing demand. As not all ships are run at reduced speeds yet and as there is still the option to have ships run even slower ( extra slow steaming (ESS), super slow Steaming (SSS)), there is further demand potential. Due to a combination of the above-mentioned factors, i. e. delayed delivery of new constructions and shipwrecking of old tonnage on the supply side as well as slow steaming affecting the demand side, the share of ships without charters was contained between 10 % and 12 % 11

16 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report in the year s last three quarters. Even though the situation of utilization has shown a certain bottoming out, the surplus supply of capacity puts great pressure on the charter rates. Depending on ship size and type, they came to between approx. USD 4,500 / day (2,500 TEU) and USD 6,500 / day (4,500 TEU). While some of the liner shipping companies were able to run profitable business operations again in the fourth quarter of 2009, the situation of the ship owners hardly changed in the course of the year. Both the overcapacity and the order book will remain a challenge for ship owners in the year 2010 as well. For the medium and long term we assume that the charter market will stabilize again and that charter rates will be at a profitable level. The IMF expects an average annual growth of 4.3 % for the global economic performance of the next five years (IMF, World Economic Outlook Update, 26 / 01 / 2010; World Economic Outlook Database October 2009). The container shipping market should be able to profit from this to a great extent. History shows that the container turnover increases disproportionately compared to the economic performance. Reasons fort his are the ever-increasing exploitation of country-specific cost advantages (globalization and division of labor), the positive development of the Asian domestic markets, and an advancing containerization of maritime transport. Based on these assumptions, we expect a substantial recovery of the market in the medium term. 3.2 Profit and loss, financial position and assets and liabilities of the group (according to IFRS) Profit and loss The key figures indicating profit / loss for fiscal year 2009 in comparison with fiscal year 2008 are as follows: Figures in EUR Change Revenues 62,254 46,712 15,542 Vessel operating costs - 19,615-14,241-5,374 Vessel operating result 42,639 32,471 10,168 Other operating income 1,844 3,411-1,567 Other operating expenses - 3,900-5,399 1,499 Result from shipping operations 40,583 30,483 10,100 Depreciation of property, plant and equipment and amortization of intangible assets - 22,262-13,639-8,623 Impairment - 4, ,872 Earnings before interest and taxes (EBIT) 13,449 16,844-3,395 Interest income 329 1,406-1,077 Interest expenses - 16,169-8,594-7,575 Earnings before taxes (EBT) - 2,391 9,656-12,047 Income taxes Consolidated net loss / income - 2,752 9,478-12,230 Revenues were generated in fiscal year 2009 by chartering out eleven (previous year: nine) container ships. The increase in revenue results on the one hand from the delivery of two container vessels on 5 January 2009 (MS HAM- MONIA BAVARIA and MS HAMMONIA ROMA ) and on the other hand from the fact that the following container ships generated revenues for the group over the entire fiscal year 2009 in contrast to the previous fiscal year: - MS HAMMONIA FIONIA (addition on 29 April 2008) - MS HAMMONIA DANIA (addition on 6 May 2008) - MS HAMMONIA HAFNIA (addition on 16 May 2008) - MS HAMMONIA HOLSATIA (addition on 21 May 2008) - MS HAMMONIA TEUTONICA (addition on 6 June 2008) - MS HAMMONIA MASSILIA (addition on 20 October 2008) 12

17 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 Of the eleven container vessels, eight were operated in pools (MS WESTPHALIA and MS SAXONIA in the 3,100 TEU pool, and MS HAMMONIA POMERENIA, MS HAMMONIA TEUTONICA, MS HAMMONIA HOL- SATIA, MS HAMMONIA BAVARIA, MS HAMMONIA ROMA and MS HAMMONIA MASSILIA in the 2,500 TEU pool). The three 7,800 TEU container ships MS HAMMONIA DANIA, MS HAMMONIA HAFNIA, and MS HAMMONIA FIONIA are subject to ten-year time charter agreements with A. P. Moeller-Maersk and not tied to any pools. Due to the long-term time charter, these container vessels were not affected by the consequences of the shipping crisis and made substantial contributions to the stabilization of the group s total revenue. Of the total revenues in the amount of EUR 62.3 million, 51 % were achieved with the Maersk vessels. Apart from expenses for the operation of the ships and their insurance, vessel operating costs also include crew expenses. The increase in the result from shipping operations by roughly EUR 10 million compared to the previous year results from the year-round availability of the ships delivered in fiscal year The decrease in other operating income and other operating expenses alike results from lower exchange rate gains and losses, respectively. The new 2,500 TEU constructions are depreciated over total useful lives of 25 years according to the straight-line method. The seagoing vessels MS SAXONIA and MS WESTPHALIA that had been bought second-hand are depreciated over remaining useful lives of 21 years each. The three 7,800 TEU ships bought used in the year 2008 (MS HAMMONIA FIONIA, MS HAMMONIA HAFNIA, and MS HAMMONIA DANIA ) are depreciated under the straight-line method in consideration of remaining useful lives of 19 years. Because of the effects of the shipping crisis and the corresponding lower profit expectations for the next fiscal years, altogether five container ships had to be written down. This measure concerned the two container ships in the 3,100 TEU pool as well as three of the six vessels operated in the 2,500 TEU pool. The determination of write-down was made applying the discounted cash flow procedure based on a planning model considering the forecasts prepared by the respective pool manager as well as expectations for the development of vessel operating costs. receivables due from two liner shipping companies. The recoverability of these receivables is subject to material uncertainties from today s perspective. It must be taken into consideration that material amounts of the pools receivables from the two liner shipping companies will be lost. The Management Board has therefore decided to completely write down the company s indirect share of the pools receivables from these liner shipping companies. The decrease in interest income results from the group s full investment reached at the beginning of 2009 and the significantly reduced interest rate level for fixed-term deposits. The increase in interest expenses is connected to the deliveries of seagoing vessels in the last two fiscal years. On the whole, the group s net result of EUR -2.8 million is marked considerably by the effects of the shipping crisis on the container shipping industry Financial position Financial management aims at safeguarding the group s optimum capital structure and as efficient an appropriation of available cash as possible. In the area of conflict between the so-called leverage effect on the one hand and the lending limits of the ship-financing banks on the other hand, an optimum capital structure has taken shape that provides for an approximate relation of 30 % equity, provided by HCI HAMMONIA SHIPPING AG, and 70 % borrowed capital (with respect to the seagoing vessels acquisition cost) at the time of investment (time of the ship s delivery). Funds are appropriated at the level of the individual single-ship limited partnerships. Please refer to the risk report (3.5.1) for the management of the risk of changes in exchange rates and interest rates. The group s financial position can be illustrated with the help of the cash flow statement, which differentiates between cash flow from operating activities, investing activities, and financing activities. Of the impairment expenses of EUR 4.9 million recorded in the income statement, EUR 2.9 million are accounted for by write-down of ship assets and EUR 2.0 million incurred due to impairment of receivables. Both pools record high 13

18 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report Figures in EUR Change Cash flow from operating activities 22,457 24,989-2,532 Cash flow from investing activities - 52, , ,649 Cash flow from financing activities 25, , ,718 Net change in cash and cash equivalents - 4,102-28,501 24,399 Effects of exchange rate changes on cash and cash equivalents ,236 Cash and cash equivalents at beginning of period 20,643 48,482-27,839 Cash and cash equivalents at end of period 15,967 20,643-4,676 The cash flow from operating activities is determined according to the indirect method. The cash flow from investing activities in the year 2009 primarily results from the delivery of the two container vessels MS HAMMONIA BAVARIA and MS HAMMONIA ROMA. With regard to the cash flow from financing activities, cash inflow from taking out loans or rather from using overdraft facilities (EUR 53.1 million after transaction cost) faces cash outflow from the repayment of loans (EUR 23.3 million) or rather the reduction of overdraft (EUR 1.4 million) as well as the payment of a dividend (EUR 2.7 million). In the period under report, ship mortgage loans of altogether EUR 42.5 million were taken out and funds of EUR 11.0 million from existing overdraft facilities were disbursed. As of the balance sheet date, the group had unused overdraft facilities of EUR 0.7 million. Because of the low level of charter rates, the ships MS SAXONIA and MS WESTPHALIA each deferred one quarterly payment on loan redemption. This happened in agreement with the lending institutions involved. Operating expenses and interest were covered by the charter revenues Assets and liabilities The group s assets and liabilities can be broken down as follows: Figures in EUR / 12 / 2009 % 31 / 12 / 2008 % Change Assets Non-current assets 451, , ,108 Current assets 21, , ,349 Total assets 472, , ,759 Equity 151, , ,094 Liabilities Non-current liabilities 283, , ,779 Current liabilities 37, , ,632 Total equity and liabilities 472, , ,759 14

19 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 Virtually unchanged from the previous year, 96 % of the total assets come in the shape of non-current assets. These are essentially eleven container vessels in service. Changes in non-current assets can be shown with the help of the following table: Figures in EUR January , Non-financial performance indicators On-hire days 2009 Potential on-hire days 4, Off-hire days thereof docking periods On-hire days 3, Additions including transfers 49,210 Scheduled depreciation and amortization - 22,263 Impairment - 2,888 Foreign currency effects - 13,940 Other changes - 11 Operational readiness (not including docking periods) Operational readiness (including docking periods) % % 31 December ,752 Current assets include cash and cash equivalents in the amount of EUR 16.0 million. The share of equity in total equity and liabilities has decreased only slightly from the previous year both in absolute and relative terms. The changes in equity are as follows: Figures in EUR January ,216 Consolidated net loss - 2,752 Dividend distribution - 2,728 Changes in fair value of derivatives in 8,614 cash flow hedges Exchange rate changes - 5, December ,122 Non-current liabilities essentially comprise the non-current portion of the ship mortgage loans taken out for the eleven seagoing vessels in service, in the amount of EUR million, and obligations from derivative financial instruments. Current liabilities essentially result from the ship mortgage loans current portion in the amount of EUR 30.6 million. The group s profit / loss, financial position and assets and liabilities appear altogether in good order. The fleet of HCI HAMMONIA SHIPPING AG distinguished itself by a very high level of operational readiness. Even taking into consideration off-hire days due to scheduled maintenance work in the dry dock within the requirements defined by the classification societies, operational readiness is above 99 %. Adjusted by docking periods, the level of operational readiness approximates 100 %. This reflects the sound technical condition of the ships and the crews high level of training. 3.4 Subsequent events Due to the continued weak revenues from the pools, the company has currently entered into negotiations about repayment extensions with some of the financing banks. Since the fourth quarter of 2009, payments on loans for the 3,100 TEU ships MS SAXONIA and MS WEST- PHALIA have not been made. These withholdings of payment are being tolerated by the banks for the time being. The negotiations have not yet come to a final result. For the 2,500 TEU ships of HCI HAMMONIA SHIPPING AG, the company has also carried on negotiations about repayment extensions with the financing banks since the beginning of On the basis of a positive as well as a negative revenue scenario, we assume that the operating expenses and interest will be covered by regular pool revenues. The negotiations have not led to a final result yet. No other events of special significance have occurred between the end of the year 2009 and the reporting date that might have material effects on the consolidated financial statements. 15

20 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report 3.5 Risks and opportunities Risk report The Management Board of HCI HAMMONIA SHIPPING AG considers a systematic and efficient risk management a task to be continuously developed. The group has a well-structured, DP-based risk management system. The integral components of this system are systematic risk identification and risk assessment as well as measures for the prevention, minimization, and control of risks. Special emphasis is placed on the early detection of risks that could jeopardize the company s continued existence. Material risks result from the operation of ships, financing activities, exchange rate changes, and the legal form as well as the listing on the stock exchange. The management of the risks linked to ship operation and financing is the responsibility of HAMMONIA Reederei GmbH & Co. KG, the company that operates all ships of HCI HAMMONIA SHIPPING AG. Risk monitoring as well as legal support covering corporations and capital markets law is provided by the Management Board and HCI Hanseatische Schiffsconsult GmbH. The following main risk groups are classified in the context of the risk management system: Market risks The group generates income from the operation of ships, essentially resulting in the following individual risks: Revenues from chartering out the ships do not cover the ship operating costs or the debt service or they do not provide for an adequate rate of return on the invested capital The group s 2,500 TEU and 3,100 TEU container ships are included in pool arrangements based on vessel size, minimizing the risk of discontinued operation or operation at inadequate charter rates and providing a balance between market peaks and market lows. However, new signings of individual pooled ships at below-average rates can reduce the pool result. The same applies for the case that pooled ships are temporarily out of charter. Peter Döhle Schiffahrts-KG, one of Germany s best-known and most reputable privately owned ship operating companies and brokers, manages the pool arrangements. The three 7,800 TEU container ships, HAMMONIA FIONIA, HAMMONIA DANIA, and HAMMONIA HAFNIA, have been chartered for a minimum remaining term of 8 years by the world s largest shipping company, A. P. Moeller-Maersk, providing for a long-term stabilization of the profit position. The ships charterers become insolvent or do not pay the agreed charter rates according to contract The group operates its 2,500 TEU and 3,100 TEU container ships in size-specific pool arrangements, thus reducing the individual charterer s insolvency risk as well. However, particularly in the present state of the market it cannot ruled out that charterers of individual ships become insolvent or pay the charter rates belatedly or not at all. As members of a pool, this scenario would indirectly affect the ships of HCI HAMMONIA SHIPPING AG, too. For risk minimization, charterers in financial trouble are actively supported in their restructuring efforts by the pool manager and the ship owners. This policy has already contributed to the stabilization of the financial position of several charterers in fiscal year Exchange rate risk All revenues from the ships operation are generated exclusively in USD while parts of the vessel operating costs and future dividends to be paid incur in EUR. For this reason, HCI HAMMONIA SHIPPING AG runs an active interest and currency management in order to reduce the risks of exchange rate and interest rate changes. The ships financing is currency congruent for the most part; remaining exchange rate risks are hedged to the extent that corresponding payment transactions have already been established. The ships are badly damaged, sink, or cause third-party damages during operation For the typical risks carried by the operation of seagoing vessels, serious damage, sinking, or third-party damages, adequate insurance coverage is provided by the operator. Risk of interest rate changes Borrowed capital is used for the ships financing. The risk of interest rate changes is partly limited by the conclusion of derivative interest rate hedging transactions. The risk of interest rate changes remains for the portion of external financing that is not hedged by long-term fixed interest rates or the conclusion of derivative interest rate hedging transactions. Risk of changes in financing Financing conditions are generally defined for the entire terms of contract. However, cases of violations of certain contractual obligations carry the risk that the financing bank will renegotiate the financing conditions. 16

21 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 Company-related risks Apart from the above-mentioned risks specific to the operation of ships, the group is exposed to company-related risks as well. Deciding factors for the group s success are the quality of management and key service providers as well as the company s standing with investors, business partners, and market analysts. In this context, the group has secured the Management Board members commitment by their long-term appointment. Key operational and administrative functions are supplied by qualified and experienced service providers on the basis of longterm service agreements. In addition, innovative financing concepts are prepared, timely and comprehensive shareholder information is provided, and changed conditions are responded to quickly. There are no risks from ordering speculative new constructions. Furthermore, the fleet s financing is secured by long-term loans extended by banking institutions established in the field of ship financing. Thus the group is not directly affected by the financial market crisis with regard to its financing activities. Exposure to risks that could jeopardize the company s continued existence such as over-indebtedness or insolvency or to other risks with an extraordinary or substantial effect on the group s profit / loss, financial position and assets and liabilities does not apply Internal controlling system (ICS) The internal controlling system of the Group of HCI HAM- MONIA SHIPPING AG determines the measures necessary for the timely, complete, and correct transmission of documents, data and information required for the preparation of the financial statements of the group companies, the consolidated financial statements according to IFRS, and the consolidated management report. By means of the internal controlling system applied, risks of an incorrect presentation in internal as well as external accounting shall be prevented as far as possible. However, it must be pointed out that this system cannot provide absolute certainty of a presentation free from mistakes; insofar a residual risk remains. Bookkeeping represents the basis of internal and external accounting. The ongoing business transactions and contracts concluded by the group s subsidiaries as the basis for the preparation of the consolidated financial statements according to IFRS are recorded and entered in the mandatory IFRS currency USD. Bookkeeping is handled by HAMMONIA Reederei GmbH & Co. KG within the framework of the operation contracts concluded between the group s respective subsidiaries and HAMMONIA Reederei GmbH & Co. KG. The resulting trial balances of the individual subsidiaries are then processed with an interface for data import in a separate accounting program. In this process, the accounting policies, valuation methods and group accounting policies applicable for the group of HCI HAMMONIA SHIPPING AG are applied correspondingly and uniform requirements for the presentation and recording of group-internal business transactions are taken into consideration. The group s accounting and the preparation of the consolidated balance sheet according to IFRS are provided by an externally commissioned certified accountant on the basis of the IFRS regulations applicable to the parent company and the accounting policies, valuation methods and group guidance of the AG. As essential controlling instruments for the correct and complete recording of the group companies business transactions, the following mechanisms have been implemented: - Uniformly defined and observed flow of documents and invoices between the separate divisions in charge - Classification and grading of the assignment of areas of responsibility throughout the group s subsidiaries - Uniform controlling for all the group s subsidiaries - The four-eye principle - Preparation of consolidated balance sheet by an external certified accountant Opportunities for future development Despite the currently strained situation for container shipping, we assume for the medium and long term that this segment will remain extremely attractive. Driving forces are the continuing globalization, the strong growth of emerging markets, and the advancing containerization. As HCI HAMMONIA SHIPPING AG has up-to-date shipping tonnage, the company is set to benefit from future positive developments with respect to charter rates and the trading in used ships. Opportunities might open up even in the present market environment. The acquisition of tonnage at bargain prices is one option. Prices for container vessels dropped most considerably in the year 2009 so that ships have been 17

22 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report sold 50 to 60 % below the long-term average prices. In addition, some shipping companies have difficulty with debt servicing due to the low charter rates. In such cases banks can be forced to assume ownership of the ships. Due to the necessary equity base, owning ships is very expensive for banks so that they are willing to dispose of them again. Such ships could be acquired by HCI HAM- MONIA SHIPPING AG at favorable conditions. The prerequisite is, though, that an acquisition is covered by the liquidity planning of HCI HAMMONIA SHIPPING AG. The required funds could be raised through the authorized capital for a capital increase, against contribution in cash of up to EUR 68.2 million and limited until 10 June If necessary, further measures must be resolved in order to guarantee sufficient flexibility. Another opportunity arises if the exchange rate of the USD continues to gain on the euro. As the majority of cash flows and assets are recorded in USD, a stronger USD has a positive effect on profit / loss, financial position and assets and liabilities. 3.6 Outlook Based on the current situation of crisis, a recovery toward a profitable level of charter rates cannot be expected for the short term for ships in the range of 2,000 to 3,000 TEU. For the medium term however, i. e. within the next 12 to 24 months, we see a number of factors that give rise to expectations for a sustainable balancing of capacity supply and demand. Even a recurrence of the situation after the last crisis, leading to shortage prices for shipping tonnage within just three years, appears possible. Differences in the economic growth of the regions are initially to be anticipated. Leading research institutions as well as the IMF assume considerable differences in regional growth. For the year 2010, an average growth of 1.7 % is predicted for the G10 countries, in contrast to 6.1 % in the emerging markets. To the extent that a middle class with spending power arises in India, Indonesia, and other emerging nations, the demand for consumer goods increases. Therefore the highest container growth rate is expected for the intra-asian trade whose share of the world trade today is already 25 %. Various research institutions such as Drewry assume a growth rate of roughly 8 % for the next years. Consequently we are expecting a stable demand for medium-sized tonnage in these markets. For the flow of trade we anticipate a continuation of the trend for increasing transshipment. This means that the considerable economies of scale of larger vessels (e. g. the same main engine and crew size used for 8,000 and 14,000 TEU ships) are utilized for long routes while the distribution of goods to regional ports is provided by smaller ships. Transshipment already increased from 17 % in the year 1990 to 28 % in the year This trend will lead to a higher demand for feeder ships. In view of the increasing flows of trade, we also anticipate a trend for larger units used in feeder traffic so that ships sizes up to 3,500 TEU appear realistic. Economic growth in the emerging markets and the rising importance of transshipment thus benefit the 2,000 to 4,000 TEU segment. In the first half-year 2009 we could already record an increase in demand for Panamax ships (4,250 TEU) in the course of which charter rates in the first quarter of 2010 more than doubled. We expect this trend also to take place with a time lag in the smaller ship segments. Against the backdrop of existing surplus capacity 16 % of the fleet between 2,000 and 3,000 TEU are currently out of operation, we assume a sustained recovery of charter rates only for the year The latest signings for 2,500 TEU ships over 5 years at USD 9,500 / day (and thus twice as much as charter rates realizable on the spot markets) already give indication of the liner shipping companies positive expectations. By means of the reduction of capacity, the liner shipping companies were able already to achieve freight rates that covered expenses. We expect the carter rates to follow the freight rates with a certain delay as soon as the surplus capacity has been reduced. Contrary to our forecast, HCI HAMMONIA SHIPPING AG did not generate a positive consolidated net result for the year The reason is unpredictable impairment loss in the amount of EUR 4.9 million which had a negative impact on the positive operating result and eventually led to a consolidated net loss for the year in the amount of EUR 2.8 million. Despite the first indications of recovery in the year 2010, the company will initially only be able to benefit to a limited extent from the positive market development as described above. This is due to the pool operation of ships which reflects the present trend on the charter market with delay due to its revenue balancing characteristics. Based on the current weak revenue situation relating to pool charter rates, we anticipate a negative consolidated net result for 2010 that will probably be slightly below the consolidated net result 2009, not considering special effects such as unscheduled impairment loss or reversals of impairment loss. For the year 2011 we expect an improved result in the course of the market recovery. The temporary cost cutting scheme initiated in 2009 will be continued through 2010 to the extent that the ships technical condition is not affected. 18

23 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report Basics of the remuneration system According to the articles of incorporation, each member of the Supervisory Board receives a fixed annual compensation of EUR 5, The chairman of the Supervisory Board receives one and a half times of that amount. The Management Board members do not receive any remuneration. 3.8 Profit and loss, financial position and assets and liabilities of the holding company HCI HAMMONIA SHIPPING AG Profit and loss Profit and loss of the company is essentially determined by revenues from investments and write-down on financial assets. Revenues from investments in the single-ship limited partnerships are as follows: Investments in single-ship companies Revenues from investments in EUR 000 HAMMONIA POMERENIA 452 HAMMONIA FIONIA 460 HAMMONIA DANIA 2,248 HAMMONIA HAFNIA 2,260 Total 5,420 In addition to revenues from investments in the amount of EUR 5,420k, the parent company generated revenues of EUR 132k, other interest income of EUR 93k, and other operating income of EUR 38k. Earnings of EUR 5,683k were generated altogether. As a consequence of the shipping crisis, some of the subsidiaries of HCI HAMMONIA SHIPPING AG generated very high losses in part in fiscal year This particularly involved two companies whose ships were operated in the 3,100 TEU pool. The losses partly resulted from unscheduled write-downs on ship assets as well as impairment of charter receivables. As a result, two investments in the total amount of EUR 5,184k had to be written down. In the reporting period, other operating expenses incurred in the total amount of EUR 2,554k. These essentially resulted from foreign exchange loss (EUR 479k), audit fees, tax consultancy and other consultancy fees (EUR 313k), and administrative expenses (EUR 1,575k). Altogether a net loss of EUR 2,059k was recorded in the year under review. In consideration of profit brought forward from the previous year in the amount of EUR 2,156k, the resulting retained profits come to EUR 97k Financial position In the reporting period, the parent company states a cash flow from operating activities of EUR 3.2 million. At a cash flow from investing activities of EUR million, a dividend distribution of EUR 2.7 million, currency-related changes in cash and cash equivalents of EUR million and cash and cash equivalents of EUR 6.9 million at the beginning of the period, cash and cash equivalents come to altogether EUR 1.1 million as of the balance sheet date Assets and liabilities The parent company s assets and liabilities according to HGB are as follows: in EUR / 12 / / 12 / 2008 Assets - Fixed assets 137, ,119 - Receivables and other assets 9,142 11,151 - Liquid assets 1,138 6,884 - Prepaid expenses 2, , ,178 Equity and liabilities - Equity 150, ,939 - Provisions Liabilities , ,178 19

24 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report The parent s balance sheet according to HGB states equity of EUR 150,152k as of the balance sheet date, made up of the subscribed capital of EUR 136,414k, the capital reserve of EUR 13,636k, the statutory reserve of EUR 5k, and net retained profits of EUR 97k. The decrease compared to the previous year results from the net loss of EUR 2,059k and a dividend distribution of EUR 2,728k. The company s debts relate to current trade payables in the amount of EUR 27k as well as provisions in the amount of EUR 160k. The fixed assets reported in the separate financial statements according to HGB are composed of financial assets in the amount of EUR 137,721k, relating to the investments in the single-ship companies, and intangible assets in the amount of EUR 4k. Receivables and other assets primarily result from claims to profits from the investments in single-ship limited partnerships. Prepaid expenses essentially relate to the advance payment of administrative expenses based on a service agreement. Due to the unscheduled write-down on financial assets in the amount of EUR 5,184k as the result of the shipping crisis, fixed assets virtually remained unchanged despite additions relating to the deliveries of the container ships MS HAMMONIA ROMA and MS HAMMONIA BAVARIA. The decrease in liquid assets essentially results from the delivery of the two above-mentioned container vessels and the corresponding fundraising of equity within the scope of ship financing. Other cash outflow resulted from the advance payment of service fees as well as a distribution of a dividend. In contrast, cash inflow was accounted for by the subsidiaries payment of profit transfers for fiscal year The parent company s profit / loss, financial position and assets and liabilities appear altogether in good order. 3.9 Reporting in accordance with Sections 289 (4), 315 (4) HGB The share capital comes to EUR 136,414, and is divided into 136,414 no-par bearer shares with a theoretical amount of the share capital of EUR 1,000 per share. Each share represents one vote. All shares issued represent the same rights. The sale or transfer of shares is not restricted. There are no restrictions with regard to voting rights. By shareholders resolution passed at the Annual General Meeting of 11 June 2008, the creation of authorized capital in the amount of EUR 68.2 million was decided. The Management Board will decide the time of realization of a capital increase together with the Supervisory Board. By shareholders resolution passed at the Annual General Meeting of 10 June 2009, the company s Management Board and Supervisory Board were authorized to repurchase own shares of up to 10 % of the company s current share capital and to use own shares thus acquired. Direct or indirect shareholdings that exceed 10 % of the voting rights as of 31 December 2009 are owned by HSH Nordbank AG, Martensdamm 6, Kiel (19.34 %). HAMMO- NIA Reederei GmbH & Co. KG, Elbchaussee 370, Hamburg, holds an interest of 9.94 %. Peter Döhle Schiffahrts- KG, Elbchaussee 370, Hamburg, with indirect holdings of 3.33 % through a subsidiary, has an interest of 32 % in HAMMONIA Reederei, and the interest of HAMMO- NIA Reederei is attributed to Peter Döhle Schiffahrts-KG. Therefore Peter Döhle Schiffahrts KG exceeds the threshold of 10 % of the voting rights (13.27 %). There are no privileged shares granting voting right control. Employees who do not exercise voting right control directly do not hold interests in the share capital. According to Section 84 AktG the Supervisory Board is responsible for appointing and dismissing members of the Management Board. The articles of incorporation of HCI HAMMONIA SHIPPING AG do not provide diverging regulations. In the Supervisory Board meeting of 9 December 2009, Jan Krutemeier was appointed member of the Management Board effective 1 January 2010 for the remaining term of Jens Burgemeister, who had stepped down from the board at the end of the year His first term will thus end on 18 December Mr. Krutemeier is authorized to act as sole representative of the company in relation to third parties and he is exempt from the restrictions stipulated by Section 181 2nd alt. BGB (Civil Code). Amendments to the articles of incorporation generally require a three-quarter majority of the capital represented at passing the resolution according to Section 179 AktG. Law permits the articles of incorporation to provide for a different majority of the represented capital in case of proposed changes to the nature and purpose of the business, it must be a larger majority. In this regard, the general provision of Section 11 (2) of the articles of incorporation reads as follows: The resolutions of the General Meeting are passed, insofar as there are no conflicting compulsory statutory provisions, with the simple majority of the votes 20

25 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 cast or, if the law provides for a majority of the capital in addition to the majority of votes, with the simple majority of the share capital represented at passing the resolution. For certain subject matters, the law provides for larger majorities of the capital and / or additional conditions in compulsory regulations. Amendments to the articles of incorporation that only concern their wording may be resolved by the Supervisory Board according to Section 14 of the articles of incorporation The Management Board was authorized by shareholders resolution of 11 June 2008 to increase the company s share capital, subject to the Supervisory Board s consent, by up to EUR 68,207, until 10 June 2013 through the one-time or repeated offer of no-par bearer shares against cash contribution (authorized capital). There is no other authorized capital. There is no conditional capital. The company has not entered into any material agreements on the condition of a change of control as a result of a takeover bid subject to mandatory reporting according to Section 289 (4) no. 8 HGB. The company has not entered into any compensation agreements with members of the Management Board or employees for the case of a takeover bid Statement on corporate governance Working methods of Management Board and Supervisory Board Management Board The structure of governance and supervision implemented by HCI HAMMONIA SHIPPING AG provides for a dual board system in accordance with German stock corporation law. The two members of the Management Board govern the company on their own authority with the objective of a sustainable increase in shareholder value. Usually the Management Board convenes every four weeks in regular Management Board meetings and continuously maintains close contact beyond those sessions. The Management Board as a whole makes the following decisions: in all issues for which a resolution passed by the entire Management Board is required by law, the articles of incorporation, or the Management Board s rules of procedure. Business transactions that require the Supervisory Board s consent beyond the legal requirements are defined within the scope of the Management Board s rules of procedure. The Management Board informs the chairman of the Supervisory Board regularly about the company s business situation. In the event of other relevant incidents of potential material impact on the business situation, the Management Board must report to the chairman of the Supervisory Board without delay. Supervisory Board The Supervisory Board of HCI HAMMONIA SHIPPING AG assumes monitoring and advisory functions. The board has three members. The Supervisory Board is responsible, among other things, for the approval and thus the adoption of the consolidated financial statements and the separate financial statements of HCI HAMMONIA SHIP- PING AG and maintains close contact with the auditor for this purpose. The members of the Supervisory Board are not engaged in any business or personal relationships with the company that would imply a conflict of interests and thus limited independence. Cooperation of Management Board and Supervisory Board Management Board and Supervisory Board work together closely for the company s benefit. The Management Board coordinates the company s strategic orientation with the Supervisory Board and discusses the status quo of the strategy s realization with the Supervisory Board at regular intervals. The regular contact of Management Board and Supervisory Board is an integral component of an efficient cooperation in the company s interest. In the four scheduled Supervisory Board meetings, the Management Board reports on the intended business policy and other substantial concerns for the company, in particular profit / loss, financial position and assets and liabilities, risk position, risk management, and risk controlling. In addition, the Management Board reports at least once a year on essential issues of corporate planning. Arising conflict of interests is reported to the Supervisory Board by the Management Board members without delay. In the past fiscal year, no conflicts of interest of the individual members of the Management Board occurred. The chairman of the Supervisory Board maintains regular contact with the Management Board, and together the strategy, the business performance, and the risk management of HCI HAMMONIA SHIPPING AG are discussed and monitored. The chairman of the Supervisory Board is informed without delay about relevant incidents that are of material importance for the assessment of business situation and performance as well as the governance of the company by the Management Board. If necessary, the 21

26 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report chairman of the Supervisory Board promptly informs the Supervisory Board and convenes an extraordinary Supervisory Board meeting if indicated Statements on corporate governance practices HCI HAMMONIA SHIPPING AG has not determined any particular guidelines for specific corporate governance practices beyond the statutory requirements Corporate governance report The German Corporate Governance Code (GCGC) provides rules and guidance for corporate governance and supervision of listed companies in Germany. The GCGC promotes transparency and efficiency in corporate governance and is intended to strengthen the confidence of domestic and international investors and other stakeholders in the management and supervision of listed companies. Management Board and Supervisory Board of HCI HAMMONIA SHIPPING AG commit themselves to the general objectives of the Code. However, the specific organization of business activities leads to a number of divergences from the Code s recommendations. Management Board and Supervisory Board of HCI HAM- MONIA SHIPPING AG aim at generating an attractive and sustainable return on the investment of our company s shareholders and at increasing the shareholder value in the long term. HCI HAMMONIA SHIPPING AG is a management holding company for ship investments. HCI HAMMONIA SHIPPING AG is listed on the stock exchange for the purpose of providing easy and flexible access to the attractive asset category of ship investments especially to institutional investors. Management Board and Supervisory Board of HCI HAM- MONIA SHIPPING AG are committed to responsible conduct for the benefit of the shareholders and other stakeholders of the company. Potentially conflicting interests of Management Board and Supervisory Board members are disclosed in detail in the company s stock exchange prospectus. The notes of this annual report 2009 contain information about transactions involving related companies and individuals. In our opinion, the firmly established cooperation of HCI HAMMONIA SHIPPING AG, HCI Hanseatische Schiffsconsult GmbH, and HAMMONIA Reederei GmbH & Co. KG is a key factor for the successful realization of the corporate strategy and for the achievement of the company s goals. Management Board and Supervisory Board The Management Board has two members who manage the company on their own authority. The members of the Management Board, Jan Krutemeier and Dr. Karsten Liebing, are also managing directors of HCI Hanseatische Schiffsconsult GmbH and HAMMONIA Reederei GmbH & Co. KG, respectively. This allows the close connection of services and the two companies know-how with HCI HAMMONIA SHIPPING AG. The three-member Supervisory Board of HCI HAMMONIA SHIPPING AG supervises and advises the Management Board. Because of its small number of members, the Supervisory Board has not established committees and deals with all relevant topics in full session. Chairman of the Supervisory Board is Werner Berg. Share ownership The members of the Management Board do not have noteworthy holdings of the company s shares; the Supervisory Board members do not hold shares of the company. Communication HCI HAMMONIA SHIPPING AG gives reports on business operations in press releases and ad hoc announcements. Detailed information is provided in the form of annual reports and half-year interim reports. The company informs about developments by quarter with its interim financial statements. The company s Web site provides all relevant information and statements about the share, the General Meeting, and the financial calendar. Our investor relations team is always happy to answer your questions; contact data can also be found on the Web site Declaration of compliance in accordance with Section 161 AktG Management Board and Supervisory Board of HCI HAM- MONIA SHIPPING AG (the company ) declare that the company complied with the recommendations of the Government Commission German Corporate Governance Code in its version of 6 June 2008 (in the following: Code old version ) as announced by the Federal Ministry of Justice in the official section of the electronic Federal Gazette on 8 August 2008 between the issue of the last declaration of compliance and 4 August 2009 with the exceptions listed below. The company s Management Board and Supervisory Board also declare that the company has complied with the recommendations of the Government Commission German Corporate Governance Code in its version of 18 June 2009 (the Code ) as announced by the Federal Ministry of Justice in the official section of 22

27 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report 2009 the electronic Federal Gazette on 5 August 2009 with the exceptions listed below since 5 August 2009 and will do so in the future: According to No. 3.8 (2) of the Code old version in effect until 4 August 2009, an adequate deductible should be provided for in D&O insurance policies taken out for Management Board and Supervisory Board by the company. Since 5 August 2009, the new regulation of Section 93 (2) sentence 3 AktG introduced by the VorstAG (Appropriateness of Management Board Remuneration Act) has been applicable for Management Board members. Accordingly, D&O insurance must provide for a deductible of at least 10 % of damages up to at least one and a half times of the Management Board member s fixed annual remuneration. For insurance agreements concluded before 5 August 2009, this new regulation is applicable from 1 July No. 3.8 (2) sentence 2 of the Code in the version in effect since 5 August 2009 includes the recommendation that a corresponding deductible shall be agreed for Supervisory Board members. The D&O insurance concluded prior to 5 August 2009 for members of the company s Management Board and Supervisory Board does not provide for a deductible. The company holds the view that the agreement of a deductible is not a suitable instrument for improving the board members sense of responsibility in observing their duties and responsibilities and exercising their functions. The practice adopted by the company is in line with international standards. Therefore there are also no plans for the future introduction of a deductible with respect to Supervisory Board members. To what extent an adjustment to the existing D&O insurance policy for Management Board members will have to be made or if this is not necessary because the Management Board members do not receive remuneration from the company will be decided by the company in good time prior to 1 July According to No , the Management Board shall have a chairman or speaker. The allocation of certain areas of responsibility to the company s individual Management Board members is not provided for. As the Management Board consists of two members who the company intends to have equal rights, the appointment of a a chairman or speaker is not desired. Nos and of the Code old version, in effect until 4 August 2009, carried the recommendation that the Supervisory Board should decide and regularly review the amount and structure of the Management Board s remuneration, remuneration instruments applied, and material components of the contracts of employment in full session. Furthermore, the Code offered recommendations for the arrangement of remuneration in case of a premature termination of the Management Board members employment contracts and in the event of a change of control. By the VorstAG (Appropriateness of Management Board Remuneration Act) and the new version of the Code, some of the previous recommendations were adopted by the AktG (Stock Corporation Act) and new recommendations have been introduced. As the members of the Management Board have not entered into contracts of employment with the company and do not receive remuneration for their services, decisions on the remuneration s amount and structure and on remuneration instruments applied are still not indicated. Even in the case of premature termination of employment or in the event of a change of control, the company s Management Board members would not receive remuneration. Therefore the Code s recommendations for the specific arrangement of Management Board remuneration are not applicable. According to Nos and 4.2.5, the total remuneration of each Management Board member shall be disclosed in a remuneration report. As the members of the company s Management Board do not receive remuneration for their service to the company, disclosure is not required. According to No , conflicting interests of the Management Board shall be disclosed to the Supervisory Board promptly; all business transactions between the company and members of the Management Board or their related parties shall correspond with standards customary in the trade. Due to the contractual framework of the company with regard to contracting parties, some conflicts of interests do arise; these have already been disclosed in detail in the stock exchange prospectus in their entirety. According to No (1) sentence 2 of the Code, a long-term succession plan for Management Board members is recommended. The Supervisory Board shall also pay attention to diversity in choosing the members of the Management Board. Such a long-term succession plan for the company s Supervisory Board and Management Board as well as the observance of diversity are not provided for. As the Management Board has only two members, diversity can be observed only to a limited extent. The company has no general plans for long-term succession planning. However, the Supervisory Board intends to look for successors for Management Board members who retire on schedule in good time. There is no longterm planning for Management Board members who step down on short notice. 23

28 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Management Report According to No (2) sentence 3 of the Code, an age limit shall be determined for members of the Management Board. The company neither provides for nor intends to introduce a general age limit for Management Board members. The company does not find such a limit adequate as the company s management primarily depends on the Management Board members knowledge, skills, and professional experience. According to Nos through of the Code, the Supervisory Board shall establish committees made up of professionally qualified members, dependent on company specifics and the number of Supervisory Board members. In view of the fact that the company s Supervisory Board has only three members in accordance with the articles of incorporation, the establishment of committees is not intended. According to No sentence 2 of the Code, an age limit for Supervisory Board members shall be determined and considered in proposals for the election of Supervisory Board members. Diversity shall be observed in choosing the members of the Supervisory Board. The company neither provides for nor intends to introduce a general age limit for Supervisory Board members. The company does not find such a limit adequate as the company s supervision primarily depends on knowledge, skills, and professional experience. As the Supervisory Board has only three members, diversity can be observed only to a limited extent. According to No (2) sentence 1 of the Code, the members of the Supervisory Board shall receive successoriented remuneration in addition to a fixed remuneration. The company s articles of incorporation do not provide for success-oriented remuneration for Supervisory Board members, and an introduction of such a provision is not intended. The company holds the view that successoriented remuneration is not a suitable instrument for supporting the Supervisory Board s controlling function. Furthermore, Section 7 (1) sentence 4 of the company s articles of incorporation stipulates that by shareholders resolution the Supervisory Board may be granted a higher remuneration than determined in the articles of incorporation so that adequate flexibility is provided for. According to No. 6.3 sentence 2 of the Code, all new facts that have been communicated to financial analysts and comparable addressees shall be made available to all shareholders without delay. The company reserves the right to diverge from this recommendation in individual cases. Sensitive corporate data may be important for the work of financial analysts. However, it must be decided in the individual case if such data should be made available to the public and thus competitors as well. According to No sentence 2 of the Code, the consolidated financial statements shall be released within 90 days and the interim financial statements shall be released within 45 days after the respective end of the reporting date. The company holds the view that the statutory regulations for the release of financial statements are sufficient. A narrower time schedule for the preparation and audit of the financial statements would possibly affect their quality. Management Board and Supervisory Board of HCI HAM- MONIA SHIPPING AG Berlin, 9 December 2009 on behalf of the Management Board: signed Jens Burgemeister on behalf of the Supervisory Board: signed Werner Berg 24

29 Consolidated Management Report HCI HAMMONIA SHIPPING AG Annual Report Remuneration report Each member of the Supervisory Board receives a fixed annual compensation of EUR 5, in accordance with the articles of incorporation. The chairman of the Supervisory Board receives one and a half times of that amount. Furthermore, expenses linked to the duties and responsibilities of Supervisory Board membership are reimbursed. The Management Board members receive no remuneration. Information on remuneration can also be found in the management report on page 19. Hamburg, 15 April 2010 Dr Karsten Liebing Member of the Management Board jan Krutemeier Member of the Management Board 25

30 HCI HAMMONIA SHIPPING AG Annual Report HOMMONIA DANIA (charter name Maersk Karlskrona) 7,800 TEU container ship.

31 HCI HAMMONIA SHIPPING AG Annual Report

32 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements 4 Consolidated Financial Statements Consolidated income statement EUR Note Revenues 26 62,254, ,711, Vessel operating costs 27-19,615, ,240, Vessel operating result 42,638, ,471, Other operating income 28 1,843, ,410, Other operating expenses 29-3,899, ,398, Result from shipping operations 40,583, ,483, Depreciation and amortization of property, plant and equipment and intangible assets 30-22,262, ,639, Impairment loss 31-4,871, Earnings before interest and taxes (EBIT) 13,448, ,843, Interest income , ,406, Interest expenses 33-16,169, ,594, Earnings before taxes (EBT) - 2,390, ,656, Income taxes , , Consolidated net income for the year - 2,752, ,477, Earnings per share (basic) (EUR) Earnings per share (diluted) (EUR) Statement of comprehensive income EUR Note Consolidated net income for the year - 2,752, ,477, Foreign exchange losses / (gains) from currency translation of subsidiaries financial statements - 5,227, ,677, Gains / (losses) from hedging instruments applied for cash flow hedges Changes recognized in the income startement 5,920, ,022, Changes recognized directly in equity 2,693, ,094, ,614, ,071, Other comprehensive income for the period 15 3,386, ,394, Consolidated comprehensive income 634, ,083,

33 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated balance sheet Assets EUR Note 31 / 12 / / 12 / 2008 Non-current assets 451,752, ,644, Intangible assets 5 4, ,770, Property, plant and equipment 6 450,693, ,862, Other assets 7 1,054, , Other financial assets , Other miscellaneous assets 1,054, Current assets 21,082, ,432, Inventories 8 1,462, ,668, Trade receivables 9 947, ,310, Receivables from related parties , Income tax receivables 11 4, , Other assets 12 2,690, , Other financial assets 442, Other miscellaneous assets 2,247, , Receivables from financial derivatives 13 11, Cash and cash equivalents 14 15,966, ,642, Total assets 472,835, ,076, Equity and liabilities EUR 31 / 12 / / 12 / 2008 Equity 151,122, ,216, Subsribed capital ,414, ,414, Capital reserve 15 9,771, ,771, Retained earnings 15 8,478, ,958, Accumulated other equity 15-3,541, ,928, Non-current liabilities 283,969, ,749, Financial liabilites ,812, ,438, Liabilities from financial derivatives 17 5,193, ,654, Minority interests 18 2,963, , Other liabilities ,016, Current liabilities 37,743, ,111, Financial liabilites 20 30,296, ,340, Trade payables , ,541, Payables to related parties , , Income tax liabilities ,024,72 199, Other liabilities 24 57, , Liabilities from financial derivatives 25 5,583, , Total equity and liabilities 472,835, ,076,

34 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Consolidated cash flow statement EUR Note Consolidated net income for the year - 2,752, ,477, Depreciation, amortization and impairment of property, plant and equipment and intangible assets 25,150, ,639, Tax expense 361, , Elimination of net interest income 15,839, ,187, Other non-cash income and expenses 5,201, ,818,14 Decrease / increase in working capital - 4,490, ,660, Decrease / increase in inventories 150, ,312, Increase in trade receivables - 698, ,224, Increase / decrease in receivables from related parties 50, , Increase in other assets - 3,360, , Decrease / increase in trade payables - 509, ,102, Decrease in payables to related parties - 500, , Increase in other liabilities 377, ,728, Taxes received / paid 38, , Interest paid - 16,947, ,925, Interest received 56, ,402, Cash flow from operating activities 38 22,456, ,988, Payments to acquire intangible assets and property, plant and equipment - 52,252, ,900, Cash flow from investing activities 38-52,252, ,900, Dividend distribution - 2,728, Proceeds from additions to loans 53,462, ,785, Transactions costs for loans - 314, ,790, Repayments of loans - 24,726, ,584, Cash flow from financing activities 38 25,693, ,411, Net change in cash and cash equivalents - 4,102, ,501, Cash and cash equivalents at beginning of period 20,642, ,482, Effects of exchange rate changes on cash and cash equivalents - 573, , Cash and cash equivalents at end of period 37, 39 15,966, ,642,

35 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated statement of changes in equity Paid-in equity Retained earnings Accumulated other income Total consolidated equity Subscribed Capital Capitalreserve Change- In the fair value of derivatives of cash flow hedges Foreign currency translation adjustment Accumulated other equity EUR Note 15 (a) 15 (b) 15 c) u. d) 15 e) 15 e) 15 e) Balance at 1 Jan ,414, ,771, ,481, , , ,132, Consolidated net income ,477, ,071, ,677, ,394, ,083, Balance at 31 Dec ,414, ,771, ,958, ,072, ,143, ,928, ,216, Balance at 1 Jan ,414, ,771, ,958, ,072, ,143, ,928, ,216, Consolidated net income ,752, ,614, ,227, ,386, , Dividend distribution ,728, ,728, Balance at 31 Dec ,414, ,771, ,478, ,458, ,916, ,541, ,122,

36 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Consolidated statement of changes in non-current assets Development of intangible assets EUR / 01 / 2008 Exchange differences Additions Historical cost Additions from business combinations Reclassifications Disposals 31 / 12 / 2008 Acquired intangible assets 9,228, ,452, ,775, Goodwill 4,879, ,879, Total 14,107, ,452, ,655, EUR / 01 / 2009 Exchange differences Additions Historical cost Additions from business combinations Reclassifications Disposals 31 / 12 / 2009 Acquired intangible assets 1,775, ,761, , Goodwill 4,879, ,879, Total 6,655, ,761, ,894,

37 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Accumulated amortization / impairment Carrying amount 01 / 01 / 2008 Exchange differences Amortization Impairment losses Disposals 31 / 12 / / 12 / / 12 / , , ,227, ,770, ,879, ,879, ,880, , ,885, ,227, ,770, Accumulated amortization / impairment Carrying amount 01 / 01 / 2009 Exchange differences Amortization Impairment losses Disposals 31 / 12 / / 12 / / 12 / , , , ,770, , ,879, ,879, ,885, , ,889, ,770, ,

38 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Consolidated statement of changes in non-current assets Development of property, plant and equipment EUR / 01 / 2008 Exchange differences Additions Historical cost Additions from business combinations Reclassifications Disposals 31 / 12 / 2008 Advance payments Seagoing vessels 1, ,416, , ,416, ,126, ,525, ,010, ,453, ,115, Total 97,127, ,525, ,426, ,452, ,532, EUR / 01 / 2009 Exchange differences Additions Historical cost Additions from business combinations Reclassifications Disposals 31 / 12 / 2009 Advance payments Seagoing vessels 22,416, ,416, ,115, ,125, ,171, ,161, ,323, Total 454,532, ,125, ,171, , ,323, The development of intangible assets and of property, plant and equipment is part of the notes to the consolidated financial statements. 34

39 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Accumulated amortization / impairment Carrying amount 01 / 01 / 2008 Exchange differences Amortization Impairment losses Disposals 31 / 12 / / 12 / / 12 / , ,416, , , ,634, ,669, ,683, ,446, , , ,634, ,669, ,684, ,862, Accumulated amortization / impairment Carrying amount 01 / 01 / 2009 Exchange differences Amortization Impairment losses Disposals 31 / 12 / / 12 / / 12 / ,416, ,669, ,185, ,257, ,888, ,629, ,446, ,693, ,669, ,185, ,257, ,888, ,629, ,862, ,693,

40 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Notes to consolidated financial statements General notes HCI HAMMONIA SHIPPING AG is a stock corporation listed on the Hamburg Stock Exchange (Hanseatische Wertpapierbörse Hamburg) and has its registered office in Hamburg, Germany. The company address is: Burchardstraße 8, Hamburg. The company is entered in the register of companies kept at the District Court (Amtsgericht) Hamburg under no. HRB HCI HAMMONIA SHIPPING AG and its subsidiaries are active in the international shipping industry. HCI HAMMO- NIA SHIPPING AG intends to position itself as an international supplier in the container ship charter business. This objective is pursued through the purchase and operation of seagoing vessels, the sale of seagoing vessels, and the conclusion of charter agreements through the subsidiaries organized in the legal form of limited partnerships with a limited liability company as general partner (GmbH & Co. KG). As of the balance sheet date, eleven subsidiaries were in the business of ship operation. The ships operated by the subsidiaries are put into commission all over the world. The group s fiscal year is the calendar year. The group did not have own employees in the years 2009 and (1) Basis of presentation The consolidated financial statements of HCI HAMMONIA SHIPPING AG for the year ended 31 December 2009 have been prepared pursuant to the provisions of Regulation (EC) No / 2002 of the European Parliament and the Council of 19 July 2002 on the application of international accounting standards in accordance with the International Financial Reporting Standards (IFRS) passed and announced by the International Accounting Standards Board (IASB) as applicable in the European Union (EU) and completed with the statements required by German commercial law as stipulated by Section 315 a (1) HGB (Commercial Code). All IFRSs that have been adopted in the European Union and are mandatory for the 2009 financial year have been applied. The IFRS requirements were fully complied with, and their application leads to the presentation of a true and fair view of the financial position and results from operations of the HCI HAMMONIA SHIPPING Group. The provisions of German commercial law as stipulated by Section 315a (3) HGB in conjunction with Section 315a (1) HGB were observed as well. In line with the option contained within IAS 1, the Company recognises income and expenses affecting profit and loss in the income statement, whilst the reconciliation between net income for the period and comprehensive income is recognised in the statement of comprehensive income due to the income and expenses not affecting profit and loss. The income statement is presented according to total cost accounting. The consolidated financial statements are generally prepared on the basis of amortized or depreciated acquisition or production cost for the recognition of assets and liabilities. This does not apply for intangible assets and other liabilities from the acquisition of subsidiaries as well as derivative financial instruments. These items were recognized at fair value. The consolidated financial statements are based on the going concern assumption. The consolidated financial statements were prepared in euro. The figures presented in the notes to the consolidated financial statements are stated in thousand euros (EUR 000). Consolidated financial statements and consolidated management report are published in the electronic Federal Gazette (elektronischer Bundesanzeiger). (2) Consolidation (a) Principles of consolidation Apart from HCI HAMMONIA SHIPPING AG, all subsidiaries are included in the consolidated financial statements. The subsidiaries are entities whose financial and business policies HCI HAMMONIA SHIPPING AG is able to control directly or indirectly. HCI HAMMONIA SHIPPING AG generally acquires its subsidiaries as mere shelf companies. The provisions of IFRS 3 on business combinations do not apply for such acquisitions. In particular, goodwill does not need to be recognized and amortized. In some cases, however, subsidiaries are acquired that have already displayed economic activities to a certain extent (conclusion of ship purchase agreements, loan agreements, or interest hedge agreements). These subsidiaries are consolidated at the date of acquisition under the purchase method. According to the purchase method, the acquisition cost of the investment acquired is offset against the proportionate fair value of the acquired assets and assumed liabilities of the subsidiary at the time of acquisition. Any resulting positive difference is capitalized as derivative goodwill. Negative differences resulting from consolidation at the time of acquisition are recognized 36

41 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 immediately in profit or loss after another review of the carrying amounts. The date of acquisition is the point in time when control over the net assets and financial and operating activities of the acquired company is transferred to the group. Any hidden reserves or hidden liabilities identified upon fair value measurement of assets and liabilities within the scope of initial consolidation are carried, amortized or depreciated, written off, or reversed in the following periods according to the development of assets and liabilities. Derivative goodwill is tested for impairment in the following periods at least once every year and, in case of impairment, written down to the lower recoverable amount. Subsidiaries are included in the consolidated financial statements by way of full consolidation as of the point in time when control has been transferred to HCI HAM- MONIA SHIPPING AG. Expenses and income as well as receivables and payables between consolidated companies are eliminated. Intercompany profits and losses were eliminated if material. The financial statements of HCI HAMMONIA SHIPPING AG and the consolidated subsidiaries are prepared according to the same accounting policies and valuation methods. The financial statements of consolidated subsidiaries have been prepared as of the balance sheet date of HCI HAMMONIA SHIPPING AG. Investments in subsidiaries held by other shareholders are minority interests held by the limited partners of the single-ship limited partnerships. They are reported under liabilities as minority interests in the amount of the proportionate limited liability capital. (b) Basis of consolidation There were no changes in the group of consolidated companies in the 2009 financial year compared to previous year. The basis of consolidation as of 31 December 2009 includes the following fully consolidated companies. The share in the subsidiaries capital is presented in brackets and corresponds with the voting rights: Parent HCI HAMMONIA SHIPPING AG, Hamburg Subsidiary general partner Verwaltung HCI HAMMONIA Schiffahrts GmbH, Hamburg (100 %) Subsidiaries shipping companies - MS HAMMONIA TEUTONICA Schiffahrts GmbH & Co. KG, Hamburg, (97.62 %) - MS HAMMONIA ROMA Schiffahrts GmbH & Co. KG, Hamburg, (97.64 %) - MS HAMMONIA MASSILIA Schiffahrts GmbH & Co. KG, Hamburg, (97.64 %) - MS HAMMONIA HOLSATIA Schiffahrts GmbH & Co. KG, Hamburg, (97.61 %) - MS HAMMONIA POMERENIA Schiffahrts GmbH & Co. KG, Hamburg, (97.60 %) - MS HAMMONIA BAVARIA Schiffahrts GmbH & Co. KG, Hamburg, (97.72%) - MS WESTPHALIA Schiffahrts GmbH & Co. KG, Hamburg, (97.39 %) - MS SAXONIA Schiffahrts GmbH & Co. KG, Hamburg (97.39 %) - MS HAMMONIA FIONIA Schiffahrts GmbH & Co. KG, Hamburg, (98.56 %) - MS HAMMONIA HAFNIA Schiffahrts GmbH & Co. KG, Hamburg, (98.56 %) - MS HAMMONIA DANIA Schiffahrts GmbH & Co. KG, Hamburg (98.56 %) (c) Translation of foreign currency financial statements Pursuant to legal provisions (Sections 315a (1), 298 (1) in conjunction with Section 244 HGB), the consolidated financial statements are prepared in euro (presentation currency). The functional currency of the single-ship limited partnerships for the purpose of IAS 21 is the U.S. dollar (USD). The functional currency (USD) results from the fact that transactions related to the acquisition of ships and their financing, the charter market, and the material vessel operating costs are all settled in USD. Therefore all transactions of the shipping subsidiaries settled in the local currency euro or in other currencies are translated into USD at the exchange rate as of transaction date in accordance with IAS 21. Monetary assets and liabilities are adjusted to the USD exchange rate as of the balance sheet date. Assets and liabilities of subsidiaries whose functional currency is not the euro are translated at the exchange rate as of the balance sheet date. Items of the income statement are translated at the respective year s annual average exchange rate. Equity components of subsidiaries as well as minority interests are translated at the respective historical exchange rate of the time they incur. Exchange differences resulting from currency translation are recognized directly in equity under foreign currency translation adjustments. 37

42 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Exchange rates for the translation of financial statements prepared in foreign currencies have developed in relation to the euro as follows: Foreign currency for EUR 1 Average exchange rate Exchange rate as of balance sheet date / 12 / / 12 / 2008 USD For the translation of financial statements prepared in foreign currencies with regard to single-ship limited partnerships that took up business operations due to the acquisition of seagoing vessels only in the course of fiscal year 2008, average exchange rates were determined and applied for the period of business operations. (3) Accounting policies and valuation methods (a) Recognition of income and expenses Revenues are recognized at the time performances are made if the amount of revenues can be reliably determined and the economic benefit will probably accrue. Operating expenses are recognized on the date of performance or expensed as incurred. Interest is recognized as expenses or income, respectively, in the period in which the interest incurs. Interest expenses incurred in connection with the acquisition and production of qualified assets are capitalized in the group. In fiscal year 2009 no such capitalization became necessary. Minority interests in the result are calculated on the basis of the result determined in accordance with the accounting principles under German commercial law. (b) Intangible assets Acquired intangible assets are capitalized at acquisition cost. Acquired intangible assets with definite useful lives are amortized on a straight-line basis over the expected economic useful lives of three years from the time they are ready for use. Within the framework of the acquisition of subsidiaries, the group has capitalized intangible assets resulting from hidden reserves from contracts related to the purchase of seagoing vessels. The intangible assets are transferred to property, plant and equipment upon the acquisition of the seagoing vessels and then amortized according to the seagoing vessels respective useful lives. Intangible assets with indefinite useful lives do not apply for the group with the exception of derivative goodwill. The carrying amounts of derivative goodwill are tested for impairment at least once every year. The goodwill that had arisen in the context of business combinations had been written off entirely in the year it arose. Therefore no goodwill is recognized for the HCI HAMMONIA SHIPPING Group as of 31 December There are no intangible assets generated within the group. (c) Property, plant and equipment Assets of property, plant and equipment are capitalized at acquisition or production cost and depreciated over their expected economic useful lives on a straight-line basis. Useful lives applied correspond with the expected useful lives within the group. The group s property, plant and equipment exclusively concern seagoing vessels (container ships). Useful lives of new ships are 25 years. The remaining useful lives of second-hand seagoing vessels are estimated on the basis of the respective ship s technical condition at the time of acquisition. Significant parts of an item of property, plant and equipment (seagoing vessels and major regular maintenance activities) are depreciated separately (component approach). Gains or losses from the disposal of intangible assets and property, plant and equipment are reported in other operating income or other operating expenses. (d) Impairment losses of intangible assets and property, plant and equipment The HCI HAMMONIA SHIPPING Group subjects fixed assets to impairment reviews and recognizes impairment loss if necessary. For the purpose of conducting impairment reviews, derivative goodwill is allocated to the reporting units to which goodwill is also allocated for the group s internal reporting purposes. These reporting units usually correspond with the individual group companies. The reporting units cash flows are discounted at a rate for the cost of capital 38

43 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 oriented towards the rate applied by peer companies. Impairment loss is recognized if the present value of the cash flows is smaller than the carrying amount of the intangible assets and property, plant and equipment as well as the net working capital of the reporting unit including allocated derivative goodwill. Impairment loss is recognized for other intangible assets and property, plant and equipment if the assets carrying amount is no longer covered by the expected proceeds from disposal or the discounted net cash flow from continued use as a result of certain events or developments. The cash flows are also discounted at a rate for the cost of capital oriented towards peer companies. If the determination of a recoverable amount is not possible for individual assets, cash flows of the group of assets on the next higher level are used for which such cash flows can be determined. In the reporting period, impairment loss of EUR 2,888k was recognized for property, plant and equipment. Impairment loss is reversed insofar as the reasons for the recognition of impairment loss no longer apply in the following periods. The amount of the reversal is limited to the amount that would have resulted had the impairment loss not been recognized. Impairment loss recognized for goodwill is not subject to reversal. Impairment reviews are made at the end of the fiscal year. The discount rate applied in the year under report 2009 for the determination of the seagoing vessels value in use comes to between 6.28 % and 6.67 % depending on the respective ship and its remaining useful life (previous year: 6.69 %). The determination of the net cash flow is made on the basis of the operative planning for the individual seagoing vessels. For the periods subject to detailed planning, a growth of 2.5 % was assumed for costs as well as income (previous year: 2.5 %). (e) Financial instruments The HCI HAMMONIA SHIPPING Group generally recognizes financial assets upon delivery, i. e. as of settlement date. The financial instruments applied by the HCI HAMMONIA SHIPPING Group include cash and cash equivalents, receivables, financial liabilities and loans as well as derivative financial instruments in the form of interest rate swap and currency hedges. Financial assets are initially recognized at fair value plus directly attributable transaction cost unless the financial assets are allocated to the category at fair value through profit and loss. Financial assets of the category at fair value through profit and loss are initially recognized and subsequently measures at fair value. Other financial assets are subsequently measured at fair value or amortized acquisition cost in application of the effective interest method depending on the classification of the individual financial instruments in accordance with IAS 39. The HCI HAM- MONIA SHIPPING Group does not have primary financial assets to be allocated to the category at fair value through profit and loss as of the balance sheet date. Financial liabilities are initially recognized at fair value less transaction cost and subsequently measured at amortized acquisition cost or, with regard to financial liabilities of the category at fair value through profit and loss, at fair value. The HCI HAMMONIA SHIPPING Group does not have primary financial liabilities to be allocated to this category as of the balance sheet date. Financial assets are derecognized if either the rights to receive the cash flows generated from these assets have expired or virtually all risks have been transferred to a third party in such a way that the criteria for derecognition are fulfilled. Financial liabilities are derecognized if the obligations have been extinguished, canceled, or expired. (i) Cash and cash equivalents Cash and cash equivalents include balances on current accounts and term deposits with maturities of only a few days. (ii) Receivables and other assets Receivables and other primary financial assets allocated to the category loans and receivables are initially recognized at fair value. Subsequent measurement occurs at amortized acquisition cost in application of the effective interest method. Impairment loss of receivables and other primary financial assets is made allowance for by using allowance accounts. Write-downs are recorded if there is objective evidence of a default risk for the respective financial asset. The amount of the valuation allowance is based on past experience or individual risk assessment. In fiscal year 2009, write-downs in the amount of EUR 1,984k (previous year: EUR 0k) were carried out in accordance with such assumptions. (iii) Financial liabilities Financial liabilities are initially recognized at fair value. They are subsequently measured in general at amortized acquisition cost in applying the effective interest method. 39

44 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements (iv) Derivative financial instruments Derivatives applied by the group are interest rate swap contracts and currency hedges used for hedging interest rate and currency risks. Derivative financial instruments are recognized at fair value. The recognition of changes in the fair value of derivative financial instruments depends on whether these instruments are applied as hedging instruments and whether the requirements for hedge accounting are met in accordance with IAS 39. If these requirements are not met despite an existing economic hedging relationship, changes in fair value of the derivative financial instruments are recognized immediately in profit or loss. The effective portion of a change in fair value of a derivative financial instrument designated as a hedging instrument and fulfilling the requirements for hedge accounting for the purpose of hedging cash flows (cash flow hedge) is recognized directly in equity as accumulated other comprehensive income, taking into account the related tax effect. The ineffective portion is recognized in the income statement. The effective portion is recognized in the income statement only if the hedged item is recognized as profit or loss. (v) Fair value of financial instruments The fair value of financial instruments is determined on the basis of corresponding market value or valuation methods. The fair value of cash and cash equivalents and other current primary financial instruments corresponds with the carrying amounts as of the respective balance sheet dates. The fair value of non-current receivables and other assets as well as non-current provisions and liabilities is determined on the basis of the expected cash flows in applying the reference interest rates as of the balance sheet date. The fair value of derivative financial instruments is determined on the basis of the reference interest rates as of the balance sheet date. (f) Inventories Inventories concern the seagoing vessels stock kept on board. The amount of inventories is determined on the basis of inventory stocktaking as of the balance sheet date. Acquisition cost is established according to the FIFO method. Inventories are valuated at the lower of acquisition cost and net recoverable amount. If the reasons that resulted in an impairment of inventories cease to apply, the impairment loss is reversed. (g) Provisions Provisions are made insofar as an obligation towards a third party exists as a result of a past event and the obligation will probably result in a future outflow of resources that can be reliably estimated. If the provision cannot be recognized because one of the above criteria is not met, the corresponding obligations are disclosed under contingent liabilities unless the probability that payment will be claimed is very low. Provisions for obligations are discounted if these obligations will probably not result in an outflow of resources in the following year already. The carrying amount of provisions is reviewed as of each balance sheet date. (h) Income taxes Current taxes are expensed as incurred at the amounts owed. Deferred taxes are created to account for future tax effects resulting from temporary differences between the tax base of assets and liabilities and their related carrying amounts in the financial statements according to IFRS as well as on loss carry-forward. The measurement of deferred taxes is based on the tax laws in effect at the end of the respective fiscal year and applicable to the fiscal years during which the differences are balanced or loss carry-forward is probably utilized. Deferred tax assets on temporary differences or loss carry-forward are recognized only if their realizability appears sufficiently certain. Deferred taxes are recognized for temporary differences arising from the fair value measurement of assets and liabilities in the context of company acquisitions. Deferred taxes for temporary differences arising during subsequent measurement with regard to derivative goodwill are recognized only if the derivative goodwill is tax deductible. Loss carry-forward is not taken into account in the determination of deferred tax assets in the context of earnings contributions covered by taxation in accordance with Section 5a EStG (tonnage tax), governing the separate and uniform determination of the taxable income single-ship companies. Due to tonnage taxation, differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements according to IFRS with regard to the single-ship limited partnerships have been considered permanent. The carrying amount of deferred tax assets is reviewed as of each balance sheet date and reduced to the extent it is no longer probable that sufficient taxable income will 40

45 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 be available against which the deferred tax asset can be partially utilized. Deferred tax assets and deferred tax liabilities are offset against each other if the company has an enforceable claim to set off current tax assets against current tax liabilities and deferred taxes refer to income taxes of the same taxable entity, raised by the same tax authority. (i) Foreign currency transactions Acquisitions and sales in foreign currency are translated at the daily exchange rate as of the transaction date. Assets and liabilities in foreign currency are translated into the functional currency at the exchange rate as of the balance sheet date. The average USD exchange rate as of 31 December 2009 on which the consolidated financial statements of HCI HAMMONIA SHIPPING AG are based comes to USD / EUR (previous year: USD / EUR). Foreign exchange gains and losses resulting from these currency translations are recognized directly in the income statement. (j) Use of estimates The estimates and assumptions underlying the preparation of the consolidated financial statements at hand affect the valuation of assets and liabilities, the disclosure of contingent assets and contingent liabilities as of the relevant balance sheet dates, and the amounts of income and expenses in the reporting period. Estimates must be made particularly for determining the carrying amounts of deferred taxes. There are uncertainties with respect to the interpretation of complex tax issues. Therefore differences between the actual results and our assumptions or future changes in our estimates may result in changes in the tax result of future periods. Due to our assessment of the tax situation of the HCI HAMMO- NIA SHIPPING Group, no deferred taxes were considered for the consolidated financial statements; in particular, no benefits from tax loss carry-forward were capitalized. Further material estimates and assumptions primarily concern the determination of the useful lives of seagoing vessels, their residual values at the end of their useful lives, and the estimate of cash flows within the framework of conducting impairment reviews (carrying amounts of seagoing vessels including maintenance component as of the balance sheet date: EUR 450,693k; previous year: EUR 417,446k). The group makes assessments and assumptions relating to expected future developments in the context of preparing financial statements. Estimates derived from these assumptions and assessments will of course hardly ever match the actual circumstances to occur in the future. (4) New accounting regulations released by the IASB The basis of accounting of the HCI HAMMONIA SHIPPING Group according to IFRS are the accounting standards of the IASB as adopted by the European Commission for application in the European Union within the framework of the endorsement process in accordance with Regulation (EC) No / 2002 in conjunction with Section 315a (1) HGB. IFRS or amendments to IFRS newly released by the IASB in fiscal years 2008 and 2009 are subject to mandatory application by the HCI HAMMONIA SHIPPING Group only after a corresponding resolution of the European Commission within the framework of the endorsement process. The following Standards had to be applied in the consolidated financial statements of HCI HAMMONIA SHIPPING AG for the fiscal year ended 31 December 2009 for the first time: - The amendment to IFRS 2: Share-based Payment Vesting Conditions and Cancelations includes changes in the definition and accounting treatment of vesting conditions as well as clarifications relating to the treatment of annulments. The amendment to IFRS 2 has no effects on the consolidated financial statements of HCI HAMMONIA SHIPPING AG as the group has not issued any of the instruments subject to IFRS 2. - Within the scope of the amendments to IFRS 7: Improving Disclosures about Financial Instruments, the IASB defined a fair-value hierarchy of three levels to be applied with respect to the disclosure of information on financial instruments. In addition, the range of disclosures relating to liquidity risks was expanded. Please refer to note 41 for information on disclosures resulting from the application. - I FRS 8: Operating Segments supersedes IAS 14, which previously governed segment reporting. Segment reporting according to IFRS 8 is oriented towards the internal reporting structure relating to the definition and presentation of mandatory reporting by segment ( management approach ). Due to the internal reporting structure and the fact that the group regards itself as a one-product enterprise, there are no changes compared to the prior-year presentation. For additional information please refer to note I n September 2007 the IASB released a revision of IAS 1: Presentation of Financial Statements. Due to the amendments to IAS 1, the consolidated financial 41

46 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements statements include a consolidated statement of comprehensive income, presenting expenses and income both resulting and not resulting in profit or loss. The group has made use of the option provided by IAS 1 and thus presents the expenses and income resulting in profit or loss in the consolidated income statement and the bridge from net income for the period to comprehensive income including income and expenses directly recognized in equity in the consolidated statement of comprehensive income. - The amendment to IAS 23: Borrowing Costs commits companies to capitalize borrowing cost directly attributable to the acquisition, construction, or production of a qualifying asset. The application had no effects on the consolidated financial statements as no qualifying assets within the meaning of IAS 23 (e. g. acquisition of a new container vessel from a shipyard) were acquired in fiscal year The amendments to IAS 32: Financial Instruments: Presentation and IAS 1: Presentation of Financial Statements Puttable Financial Instruments and Obligations Arising on Liquidation make it possible under certain conditions to classify puttable instruments as equity. The amendments had no effects on the consolidated financial statements. - IFRIC 9: Reassessment of Embedded Derivatives and IAS 39: Financial Instruments: Recognition and Measurement Embedded Derivatives include a clarification according to which in the event of reclassifications of financial assets of the category at fair value through profit and loss it must be examined whether there are embedded derivatives that are subject to separate accounting treatment. The amendments had no effects on the consolidated financial statements as such circumstances do not exist within the group. - IFRIC 13: Customer Loyalty Programs governs the accounting treatment of customer loyalty programs. IFRIC 13 has no effects on the consolidated financial statements as the group companies do not apply customer loyalty programs. - The first project of the IASB for the improvement of IFRS (annual improvements project), completed in May 2008 with the release of various amendments or editorial adjustments to 20 existing IFRS, had no material effects on the consolidated financial statements. The following Standards and Interpretations released by IASB or IFRIC do not have to be applied yet, either because they have not yet been adopted by the EU or the point in time of first compulsory application has not arrived yet. Standards and Interpretations already adopted by the EU but not subject to compulsory application in fiscal year 2009 are the following: - Within the scope of the second project of the IASB for the improvement of International Financial Reporting Standards (annual improvements project), released in April 2009, various Standards were amended. If not provided otherwise in the respective amendments, they are subject to compulsory application for fiscal years beginning on or after 1 January IFRIC 12: Service Concession Arrangements was released in November 2006 and is subject to compulsory application for fiscal years beginning on or after 29 March The Interpretation defines the accounting treatment of obligations and rights assumed within the framework of service concession agreements. - In July 2008, IFRIC 15: Agreements for Construction of Real Estate was released, providing special regulations for the contract construction of real estate with regard to the application of IAS 11: Construction Contracts and IAS 18: Revenues. The Interpretation is subject to compulsory application for fiscal years beginning on or after 1 January In July 2008, IFRIC 16: Hedges of a Net Investment in a Foreign Operation was released. IFRIC 16 includes specific regulations for the hedging and identification of foreign currency risks. IFRIC 16 requires application for fiscal years beginning after 30 June In November 2008, IFRIC 17: Distribution of Non-cash Assets to Owners was released, including among other things regulations for the measurement of non-monetary distributions to shareholders. This Interpretation requires application for fiscal years beginning after 31 October IFRIC 18: Transfers of Assets from Customers governs the accounting treatment of a customer s asset transfers with respect to the receiving entity. IFRIC 18 requires application for fiscal years beginning after 31 October The revision of IFRS 3: Business Combinations released in January 2008 contains material changes in the application or the purchase method to business combinations, particularly changing the recognition of interests of outside investors, the disclosure of successive business acquisitions, and the treatment of conditional purchase price components and acquisition cost. The revised Standard requires application for fiscal years beginning on or after 1 July

47 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report The amendments to IFRS 2: Group Cash-settled Sharebased Payment Transactions address the accounting treatment of transactions involving share-based consideration to which the controlling group company or another group company is committed. The amended Standard is subject to compulsory application for fiscal years beginning on or after 1 January The amendments to IAS 27: Consolidated and Separate Financial Statements, relased in January 2008 as well, concern the accounting treatment of transactions involving interests in subsidiaries over which the parent retains control as well as transactions involving interests in subsidiaries resulting in the former parent s loss of control. The revised Standard requires application for fiscal years beginning on or after 1 July The amendment to IAS 32: Classification of Rights Issue addresses the classification of subscription rights, options, and stock warrants granted to the acquisition of a fixed number of own shares for a fixed amount in any currency. The amended Standard requires application for fiscal years beginning after 31 January The amendment to IAS 39: Eligible Hedged Items Amendment to IAS 39 Financial Instruments: Recognition and Measurement carries amendments to IAS 39 with regard to the accounting treatment of hedges. The amended Standard requires application for fiscal years beginning on or after 1 July 2009 These regulations will be applied by the group at the time of first compulsory application. The HCI HAMMO- NIA SHIPPING Group assumes at present that the application of these Standards and Interpretations will not have a material effect on the presentation of the group s profit / loss, financial position and assets and liabilities, with the exception of the revision of IAS 39: Eligible Hedged Items Amendment to IAS 39 Financial Instruments: Recognition and Measurement. governing the accounting treatment of the redemption of liabilities through the issue of equity instruments within the scope of renegotiations of credit conditions. IFRIC 19 requires application for fiscal years beginning on or after 1 July In November 2009 the IASB released IFRS 9: Financial Instruments. IFRS 9, which governs the accounting treatment and measurement of financial assets, represents the first stage of the project for replacing IAS 39, intended to take place in three stages. IFRS 9 supersedes the previous categories of financial assets by two categories according to which measurement is either made at fair value or amortized acquisition cost. Measurement at amortized acquisition cost requires that the entity s business model is oriented towards holding the financial asset for the generation of contractual cash flows from interest and redemption and that the cash flows provide for fixed payment dates. IFRS 9 requires application for fiscal years beginning on or after 1 January In November 2009 the IASB resolved an amendment to IAS 24: Related Party Disclosures. The amendment includes a simplification for the definition of related parties. Moreover, mandatory disclosures of transactions with government-related parties are considerably reduced for companies over which the government can exercise control, joint control, or significant influence. The amended Standard requires application for fiscal years beginning on or after 1 January Subject to their EU endorsement, these Standards and Interpretations will be applied at the time of first compulsory application. The HCI HAMMONIA SHIPPING Group assumes at present that the application of these Standards and Interpretations will not have a material effect on the presentation of the group s profit / loss, financial position and assets and liabilities. The effects of the amendments to IAS 27 and IFRS 3 on the group s profit / loss, financial position and assets and liabilities will particularly depend on the acquisitions of companies and disposals of investments in companies that the company will carry out subsequent to the date of applications of these two Standards. Standards and Interpretations released by IASB or IFRIC whose application for IFRS consolidated financial statements requires prior endorsement by the EU according to Section 315a HGB are the following: - In November 2009, IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments was released, 43

48 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Notes to the consolidated balance sheet (5) Intangible assets Changes of the individual items of intangible assets of the HCI HAMMONIA SHIPPING Group are presented in the statement of changes in non-current assets. The amounts shown as of the balance sheet date exclusively concern acquired intangible assets. They can be broken down as follows: in EUR / 12 / / 12 / 2008 Ship purchase agreements 0 1,761 Cost of Internet presence ,770 In the previous years, the group had acquired contracts on the purchase of seagoing vessels within the framework of business combinations. The capitalized contracts are transferred to property, plant and equipment upon the acquisition of the seagoing vessels and then depreciated over their respective useful lives. In this fiscal year the amount of EUR 1,761k was transferred due to the acquisition of one seagoing vessel. Costs for the Internet presence relate to HCI HAMMONIA SHIPPING AG. The capitalized amounts are amortized over an expected useful life of three years on a straightline basis. The remaining useful life as of 31 December 2009 is 10 months. (6) Property, plant and equipment The group s property, plant and equipment consist of seagoing vessels (technical equipment and machinery) as well as advance payments made on seagoing vessels. The seagoing vessels are chartered out to liner shipping companies within the framework of operating lease relationships. in EUR / 12 / / 12 / 2008 Technical equipment and machinery Seagoing vessels 445, ,457 Larg class charges 4,869 3, , ,446 Advance payments and construction in process 0 22, , ,862 Items of property, plant and equipment are recognized at depreciated acquisition cost and depreciated over their useful lives on a straight-line basis. Seagoing vessels are considered integral items; with regard to charges for the large classes, generally due after 5 years, an adequate amount is split off and amortized as a special item over 5 years. For vessels not yet docked, class charges are estimated depending on size and amortized over the remaining period until docking, while the capitalization is only made pro rata temporis if docking is intended to take place sooner than after 5 years according to schedule. For ships already docked, class charges actually incurred are amortized until the next docking. The determination of useful lives reflects the probable physical wear and tear, technical obsolescence, and legal as well as contractual provisions. Thus determined useful lives of new ships amount to 25 years. The useful lives of second-hand seagoing vessels are estimated on the basis of the respective technical state at the time of acquisition. Furthermore, the amount of scheduled depreciation is determined by the recoverable amounts at the end of an asset s economic useful life. The residual value of seagoing vessels equals their scrap value. The scrap value is subject to considerable market fluctuations. For the determination of residual values as of the balance sheet date, a scrap value of USD per ton (previous year: USD per ton) was assumed. Please refer to the asset schedule for information of the development in property, plant and equipment. 44

49 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Due to the effects of the financial crisis on the shipping industry, the seagoing vessels were reviewed for impairment by means of impairment tests, carried out as of the end of the fiscal year. The impairment test determines the recoverable amount of the seagoing vessels. It is defined as the higher of fair value less less sales costs and value in use. Because of the upheavals in the buying and selling markets for container ships noticeable since mid-2008, it can be assumed that the transactions taking place on the market are settled at prices that are significantly below the values in use. Because these transactions usually signify emergency sales or rather disposals of collateral by credit institutions. One indication of such a situation is the fact that various shipping opportunity funds are active on the market, exploiting the current situation. Therefore the group management established the value in use as recoverable amount. The value-deciding factors with respect to value in use are the future cash flows from the future use of the assets to be measured as well as the discount rates including the growth rate. As of the balance sheet date, the values in use of five seagoing vessels were below the group s respective carrying amounts. Impairment in the amount of altogether EUR 2,888k (previous year: EUR 0k) had to be recognized. Impairment loss was reported in the income statement under the item impairment. The value in use is determined on the basis of a business valuation model based in turn on the company s internal perspective. The planning of operating cash flows provides the foundations. The planning was prepared in consideration of experiences from the past and expectations with respect to the future market development. The pool managers expectations as well as publications of third-party charter brokers provide the basis for the time charter forecast. Vessel operating costs were estimated by the contractual ship operator based on experience. The cash flow is subject to fluctuations as it is dependent on a large number of factors, e. g. the development of the global economy, the demand for transport services, and the availability of other options of transport capacity and their costs. The predicted free cash flows are available for servicing the lenders of borrowed capital and for return on equity capital and they are discounted at the weighted average cost of capital. Through the use of weighted average cost of capital as discount rate, the beta factor and the market risk premium are considered in addition to the current capital structure. The beta factor was determined on the basis of a peer group analysis. For the market risk premium, it was referred to statements issued by the Institute of Public Auditors in Germany (IDW). As a result, the impairment tests were based on weighted average cost of capital between 6.28 % and 6.67 %, depending on the expected remaining useful life of the respective seagoing vessel and in consideration of the individually expected free cash flows. (7) Other assets (non-current assets) Other non-current assets can be broken down as follows: in EUR / 12 / / 12 / 2008 Transaction costs loans 0 11 Other financial assets 0 11 Accrued service costs 1,055 0 Other miscellaneous assets 1,055 0 Other assets 1, In the fiscal year HCI HAMMONIA SHIPPING AG made an advance payment in the amount of EUR 2,600k on future service costs for the period from 1 October 2009 to 30 September An adequate discount on the service costs to incur within this period was considered for the advance payment. Prepaid expenses stated under this item relate to the portion of the advance payment with a remaining term to maturity of more than one year. For further information please refer to notes (12), (43), and (44). The non-current receivables stated as of the end of 2008 related to transaction costs (service charges, etc.) from loan agreements concluded in the previous years. In the discursement of the loans, transaction costs were entered with the loans and amortized over the loans terms to maturity. 45

50 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements (8) Inventories Inventories comprise raw materials and supplies identified on the basis of stocktaking as of the balance sheet date. The item is made up of the following components: in EUR / 12 / / 12 / 2008 Lubricating oil 1,257 1,503 Deck equipment Machine equipment ,462 1,669 No write-downs on inventories were necessary in the fiscal years presented above. (9) Trade receivables All receivables from customers are recognized at acquisition cost less specific valuation allowances. Existing receivables as of the balance sheet date essentially address two pools and liner shipping companies with respect to additional services relating to time charter agreements. The gross receivables in the amount of EUR 2,931k (previous year: EUR 2,311k) were written down in the amount of EUR 1,984k (previous year: EUR 0k). Valuation allowances were necessary as the risk of bad debt loss was identified in both pools relating to receivables from one liner shipping company, respectively. Trade receivables bear no interest and have remaining terms to maturity of up to one year. (10) Receivables from related parties Receivables reported as of 31 December 2008 resulted from current settlement transactions with HAMMONIA Reederei GmbH & Co. KG as the contractual ship operating company. Valuation allowances for identifiable default risks were not necessary. Receivables from related parties have remaining terms to maturity of up to one year. Further disclosures on related party transactions can be found under note (44). (11) Income tax receivables Receivables relate to tax refund claims from withholding tax on capital. Income tax receivables have remaining terms to maturity of up to one year. (12) Other assets (current assets) Other current assets can be broken down as follows: in EUR / 12 / / 12 / 2008 Receivables from insurance companies Others 17 1 Other financial assets Tax refund claims from input taxes Deferrals relating to service costs 1,256 0 Deferrals relating to insurance Others 4 67 Other miscellaneous assets 2, Other assets 2, With respect to deferrals relating to service costs, we would like to refer you to note (7) in conjunction with notes (43) and (44). Other current assets have remaining terms to maturity of up to one year. 46

51 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 (13) Receivables from financial derivatives The receivables from financial derivatives represent the positive current value of a forward exchange transaction. For further explanations please refer to note (41). (14) Cash and cash equivalents Cash and cash equivalents comprise balances at credit institutions and can be broken down as follows: in EUR / 12 / / 12 / 2008 Balances in current accounts 2,123 2,560 Term deposits 13,844 18,083 15,967 20,643 Balances and term deposits are recognized at face value. Term deposits have terms to maturity of only a few days. Current account balances yield interest at variable interest rates for daily callable balances. Term deposits yield interest according to the prevailing interest rates for short-term cash items. (15) Equity Changes relating to equity components are presented in the consolidated statement of changes in equity. (a) Subscribed capital Unchanged from the previous year, the share capital consists of 136,414 no-par bearer shares, each carrying a theoretical amount of the share capital of EUR 1, per share. All shares are fully entitled to dividends and voting rights. At the Annual General Meeting of 11 June 2008, the Management Board was authorized to increase the company s share capital, subject to the Supervisory Board s consent, until 10 June 2013 by up to altogether EUR 68,207k through the one-time or repeated issuance of up to 68,207 no-par bearer shares against contribution in cash (authorized capital). The Management Board was authorized to partially preclude the shareholders subscription rights for the adjustment of fractional amounts subject to the Supervisory Board s consent. The Management Board was authorized to determine the further particulars of the execution of capital increases from the authorized capital subject to the Supervisory Board s consent. The Supervisory Board was authorized to amend the wording of the articles of incorporation commensurate with the scope of the capital increase from authorized capital after the complete or partial execution of the increase of the share capital or after the expiration of the term of authorization. b) Capital reserve Within the scope of the capital increase carried out by the issue of 136,364 new shares in connection with the IPO of HCI HAMMONIA SHIPPING AG on 16 November 2007, an amount of EUR 13,636k was allocated to capital reserve in accordance with Section 272 (2) no. 1 HGB. In accordance with IAS 32.37, the added equity capital was reduced by the issue costs associated with fundraising activities to the amount of EUR 3,864k. According to IAS 32.37, these costs must generally be reduced by related income tax benefits. As no tax payments are expected for the company under prevailing tax law due to the business model of HCI HAMMONIA SHIPPING AG, the costs for raising equity capital were deducted in their full amount from the added equity capital. (c) Retained earnings Retained earnings include results earned in the previous period and in the period under review by the companies included in the consolidated financial statements insofar as these results have not been distributed as dividends. Retained earnings include surplus reserves set aside by the parent company. In accordance with Section 150 (2) AktG, an amount of EUR 5k was allocated to the statutory reserve of HCI HAMMONIA SHIPPING AG in the previous years. (d) Dividends In fiscal year 2008, HCI HAMMONIA SHIPPING AG achieved a net income of EUR 8,719k in the separate HGB financial statements. Considering the loss carry-forward from fiscal year 2007 in the amount of EUR 3,830k and the allocation of EUR 5k to statutory reserve, the resulting retained earnings stated in the separate HGB financial statements amounted to EUR 4,884k. 47

52 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements The shareholders resolved on 10 June 2009 to distribute an amount of EUR per share (altogether EUR 2,728k) from the retained earnings to the shareholders as dividend. The remaining amount of EUR 2,156k was carried forward to new accounts. (e) Accumulated other comprehensive income Accumulated other comprehensive income states the changes in fair value of derivatives used in cash flow hedges as well as foreign currency translation adjustments. Fair value changes of derivatives used in cash flow hedges relate to forward interest rate swaps used by the subsidiaries for hedging variable-interest loans, classified as cash flow hedges in accordance with IAS 39. In the fiscal year, the amount of EUR 5,920k (previous year: EUR 1,023k) previously reported as accumulated other comprehensive income in equity was transferred to the income statement. Gains recognized as equity in accumulated other comprehensive income amounted to EUR 2,694k this fiscal year (previous year: losses of EUR 17,094k). The item foreign currency translation adjustments results from the translation of the separate financial statements of companies included in the consolidated financial statements from their functional currency (USD) into the presentation currency (EUR). In this fiscal year, losses of EUR 5,228k (previous year: gains of EUR 8,678k) from such currency translations were recognized in equity. (16) Financial liabilities (non-current liabilities) The disclosure concerns liabilities to banks and essentially comprises loans raised for financing the purchase of ships. The following material loans exist as of the balance sheet date: Face amount Scheduled redemption p. a. Availment as of 31 / 12 / 2009 Availment as of 31 / 12 / 2008 Interest rate Term to maturity USD 000 USD 000 USD 000 EUR 000 USD 000 EUR 000 MS HAMMONIA BAVARIA 25,983 1,614 25,176 17,476 9,400 6,754 USD-LIBOR + margin 3 January , ,292 5, CIRR 4 January 2021 MS HAMMONIA ROMA 16, ,917 11, USD-LIBOR + margin 3 January ,248 1,383 15,556 10, CIRR 5 January 2021 MS HAMMONIA DANIA 60,750 6,231 52,961 36,763 59,192 42,532 USD-LIBOR + margin 30 May , ,000 8,330 10,900 7,832 USD-LIBOR + margin 31 May 2018 MS HAMMONIA FIONIA 60,750 6,231 52,961 36,763 59,192 42,532 USD-LIBOR + margin 30 May , ,000 8,330 8,850 6,359 USD-LIBOR + margin 31 May 2018 MS HAMMONIA HAFNIA 60,750 6,231 52,961 36,763 59,192 42,532 USD-LIBOR + margin 30 May , ,000 8,330 11,800 8,479 USD-LIBOR + margin 31 May 2018 MS SAXONIA 30,000 2,072 26,374 18,308 27,928 20,068 USD-LIBOR + margin 31 December 2019 MS WESTPHALIA 30,000 2,308 26,538 18,421 28,269 20,313 USD-LIBOR + margin 28 February 2021 MS HAMMONIA TEUTONICA 16, ,295 10,617 16,129 11,590 USD-LIBOR + margin 6 June ,975 1,360 14,275 9,909 15,635 11,234 CIRR 6 June 2020 MS HAMMONIA MASSILIA 16, ,794 10,963 16,422 11,800 USD-LIBOR + margin 20 October ,058 1,367 15,033 10,435 16,058 11,538 CIRR 20 October 2020 MS HAMMONIA HOLSATIA 16, ,235 10,575 16,065 11,544 USD-LIBOR + margin 21 May ,912 1,354 14,219 9,870 15,573 11,190 CIRR 21 May 2020 MS HAMMONIA POMERENIA 24,690 1,534 22,005 15,275 23,539 16,914 USD-LIBOR + margin 29 November , ,004 4,862 7,705 5,536 CIRR 29 November

53 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 The ship mortgage loans are collateralized by promissory notes issued by the respective shipping companies. These are collateralized by senior ship mortgages in favor of the financing credit institutions. Furthermore, the shipping companies have assigned all claims from the present and future operation of the vessels and from the insurance policies to the financing banks. The total carrying amount of the assets serving as collateral for liabilities comes to EUR 451,640k (previous year: EUR 419,757k). Of this total amount, EUR 450,693k (previous year: EUR 417,446k) relate to carrying amounts of mortgaged seagoing vessels and EUR 947k (previous year: EUR 2,311k) relate to trade receivables. The non-current financial liabilities remaining terms to maturity are as follows: in EUR / 12 / / 12 / 2008 Remaining terms between 1 and 5 years 97,892 90,697 Remaining term over 5 years 177, ,742 Total 275, ,439 (17) Liabilities from financial derivatives (non-current liabilities) The disclosure relates to the market values of forward interest rate swaps for hedging variable interest payments under loan agreements. For further information please refer to note (41). The remaining terms to maturity of financial derivatives are as follows: in EUR / 12 / / 12 / 2008 Remaining terms of less than 1 year 0 3,041 Remaining terms between 1 and 5 years 3,618 9,360 Remaining term over 5 years 1,575 4,253 Total 5,193 16,654 (18) Minority interests Minority interests refer to the limited partnership interests of minority shareholders in the currently eleven singe-ship limited partnerships. The item can be broken down as follows: in EUR / 12 / / 12 / 2008 Minority interests in limited liability capital 2,939 2,514 Minority interests in consolidated earnings Special withdrawal accounts 0 0 2,964 2,640 As in the previous year minority interests in consolidated earnings were recognized in interest income. The remaining terms to maturity of minority interests are as follows: in EUR / 12 / / 12 / 2008 Remaining terms of less than 1 year Remaining terms between 1 and 5 years 0 0 Remaining term over 5 years 2,939 2,514 Total 2,964 2,640 49

54 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements (19) Other liabilities (non-current liabilities) Other non-current financial liabilities reported as of 31 December 2008 concerned encumbrances from a contract on the delivery of a seagoing vessel. The contract was acquired in the context of a business combination. Upon the seagoing vessel s delivery in early 2009, liabilities were set off against the seagoing vessel s acquisition cost. (20) Financial liabilities (current liabilities) Current financial liabilities can be broken down as follows: in EUR / 12 / / 12 / 2008 Ship mortgage loans 21,952 22,170 Overdraft facilities 7,307 0 Deferred interest 1,037 1,171 30,296 23,341 Please also refer to note (16) for ship mortgage loans. Current financial liabilities have remaining terms to maturity of up to one year. (21) Trade payables The trade payables of EUR 993k (previous year: EUR 1,541k) all have remaining terms to maturity of up to one year. The statement includes deferrals in the amount of EUR 679k (previous year: EUR 594k). (22) Payables to related parties Payables to related parties can be broken down as follows: in EUR / 12 / / 12 / 2008 Payables to contractual ship operating company and companies subject to its control Payables to company boards of HCI HAMMONIA SHIPPING AG Payables to related parties have remaining terms to maturity of up to one year. Please refer to note (44) for further information on related party transactions. (23) Income tax liabilities Current income tax liabilities include liabilities from municipal trade taxes in the amount of EUR 529k (previous year: EUR 193k) and liabilities from corporation taxes and solidarity surcharge in the amount of EUR 6k (previous year: EUR 7k). These liabilities have remaining terms to maturity of up to one year. (24) Other liabilities (current liabilities) Other current liabilities can be broken down as follows: in EUR / 12 / / 12 / 2008 Reimbursement obligations Debtors with credit balances 44 0 Deferred income 0 1 Miscellaneous tax liabilities 5 5 Other miscellaneous liabilities

55 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Reimbursement obligations reported as of the end of 2008 resulted from the settlement of accounts with shipyards. The liabilities have remaining terms to maturity of up to one year. (25) Liabilities from financial derivatives (current liabilities) Current liabilities from financial derivatives can be broken down as follows: in EUR / 12 / / 12 / 2008 Current value of interest rate swaps 5,584 0 Current value forward exchange transactions , The liabilities have remaining terms to maturity of up to one year. For further information please refer to note (41). Notes to the consolidated income statement (26) Revenues This item states the shipping companies charter revenues that can be broken down as follows: in EUR Pool charter 30,457 26,858 Time charter 31,797 19,854 62,254 46,712 (27) Vessel operating costs Vessel operating costs can be broken down as follows: in EUR Costs for repair and equipment 2,044 2,067 Ship operating fees, commissions 2,905 2,101 Costs for ship personnel 8,499 6,119 Lubricating oil and grease used 1,937 1,336 Fuels used Insurance 2,399 1,381 Miscellaneous costs ,615 14,241 51

56 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements (28) Other operating income Other operating income can be broken down as follows: in EUR Forward exchange transaction gains Other foreign exchange gains 509 1,388 Reimbursement from chartereres Proceeds from the sale of fuel Miscellaneous ,844 3,411 (29) Other operating expenses Other operating expenses can be broken down as follows: in EUR Legal, audit and consultancy fees Forward exchange transaction losses Other foreign exchange losses 1,053 1,949 Costs related to the commencement of operations at single-ship companies Fees from controlling and administrative services and other services 1, Other administrative expenses ,899 5,399 (30) Depreciation and amortization This item comprises depreciation of property, plant and equipment and amortization of intangible assets in the HCI HAMMONIA SHIPPING Group. Depreciation and amortization can be broken down as follows: in EUR Amortization of intangible assets 5 5 Depreciation of property, plant and equipment 22,258 13,634 22,263 13,639 52

57 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 (31) Impairment The disclosure concerns impairments and valuation allowances of the following balance sheet items: in EUR Property, plant and equipment 2,888 0 Trade receivables 1, ,872 0 Cp. note 6 (property, plant and equipment) and note 9 (trade receivables). (32) Interest income This item can be broken down as follows: in EUR Interest income from short-term deposits 53 1,345 Other interest income Total interest income 330 1,407 (33) Interest expenses Interest expenses essentially result from financing the seagoing vessels and can be broken down as follows: in EUR Interest expense for ship mortgage loans 10,154 7,324 Interest expense for forward interest rate swaps 5,920 1,023 Other interest expenses Total interest expenses 16,169 8,594 (34) Income taxes Taxes paid or owed on income as well as deferred taxes are recognized as income taxes. Income taxes comprise trade taxes, corporation taxes, and solidarity surcharge. Income tax expenses can be broken down by origin as follows: in EUR Current income tax expense Deferred income tax expense / income

58 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Current income tax expense relates to municipal trade taxes of single-ship limited partnerships in the amount of EUR 357k (previous year: EUR 177k). Corporation and municipal trade tax liabilities of the general partner are stated apart from that. German-based companies in the legal form of a corporation owe corporation tax at a rate of 15 % (previous year: 15 %) plus a solidarity surcharge of 5.5 % (previous year: 5.5 %) on corporation tax owed. In addition, these companies and subsidiaries in the legal form of partnerships are subject to municipal trade tax, the amount of which is determined on the basis of municipality-specific assessment rates. The notional income tax expense that would have arisen by applying the tax rate of the controlling group company HCI HAMMONIA SHIPPING AG of 32 % (previous year: 32 %) to consolidated earnings before taxes as determined in accordance with IFRS can be reconciled to income tax expenses reported in the income statement as follows: in EUR / 12 / / 12 / 2008 Earnings before income taxes according to IFRS - 2,752 9,478 Group tax rate in % 32 % 32 % Expected tax expense 0 3,033 Permanent differences 356-3,191 Non-deductible business expenses 337 Adjustment of the carrying amount of deferred taxes 0 0 Miscellaneous 5 0 Tax expense / income as reported in the income statement Permanent differences include the effects of minority interests in consolidated earnings settled via tonnage tax. Corporation and trade tax loss carry-forwards are subject to certain restrictions. A positive taxable income of up to EUR 1,000k can be reduced without limitation, while amounts exceeding this threshold can only be reduced by up to 60 % by an existing loss carry-forward. Deferred tax assets on temporary differences and tax loss carry-forward are recognized to the extent that their recoverability appears sufficiently certain in the near future. For temporary differences and tax loss carry-forwards for corporation tax purposes in the amount of EUR 7,658k (previous year: EUR 5,667k) and for trade tax purposes in the amount of EUR 6,095k (previous year: EUR 6,071k), no deferred tax assets were recognized in the fiscal year as the generation of sufficient taxable income for these amounts appears improbable in the near future. The ability to carry forward tax losses in Germany is not subject to any restrictions under prevailing law. (35) Earnings per share Earnings per share reflect the portion of the earnings generated in a given period attributable to one share, dividing group earnings by the weighted number of shares issued. Earnings per share may be diluted by so-called potential shares (such as convertible bonds or stock options). The HCI HAMMONIA SHIPPING Group does not have such potentially diluting agreements on the purchase of shares. Therefore basic earnings equal diluted earnings per share. Basic and diluted earnings per share are determined as follows: Consolidated net income / loss for the year attributable to equity holders of the parent EUR 000-2,752 9,478 Weighted average number of shares outstanding number 136, ,414 Consolidated net income / loss for the year attributable to equity holders of the parent per share EUR

59 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Notes to the consolidated cash flow statement (36) Basic information The cash flow statement distinguishes between cash flows from operating, investing and financing activities. (37) Analysis of cash and cash equivalents Cash and cash equivalents reported in the cash flow statement correspond to the same item reported in the balance sheet. Cash equivalents are term deposits with original terms to maturity of only a few days. (38) Explanation of cash flows The cash flow from operating activities is determined in application of the indirect method and amounts to EUR 22,457k (previous year: EUR 24,989k). Cash flows from investing and financing activities are determined according to the direct method. (39) Other information on the cash flow statement There were no material non-cash transactions (such as debt-to-equity swaps) in fiscal years 2009 and As a result of a waiver agreement with a bank consortium (cp. note (41) (a) (iv)), it was established that three subsidiaries may only make liquidity distributions to their owners including HCI HAMMONIA SHIPPING AG as the parent if the remaining respective cash balances and unused overdraft exceed a total amount of USD 3,250k. The subsidiaries involved have unrestricted disposal of the respective cash balances. The agreement concerns means of payment of altogether EUR 6,156k. As of the balance sheet date, the group has unused overdraft facilities of EUR 0.7 million at its disposal. Notes to segment reporting (40) General information Pursuant to IFRS 8, the group s separate segments must be defined in accordance with the so-called management approach. The deciding aspect is for which segments the group s chief operating decision maker is provided with separate financial information for the assessment of performances and the allocation of resources. Due to a large number of transactions subject to consent even at the level of the single-ship limited patrnerships, the parent s Management Board and Supervisory Board are to be regarded together as the responsible corporate entity. Management Board and Supervisory Board regularly receive financial information on the basis of consolidation. Target-actual comparisons are also prepared on the basis of consolidation. Forecast calculations are provided on aggregated basis while merely the changes in working capital relating to the respective ships are included. Separate information on the individual ships is generally not subject to regular reporting to the Supervisory Board. This is not considered necessary as the group is a one-product enterprise with a uniform manufacturing process (chartering out container vessels to liner shipping companies). The group s management of operations is based solely on the fleet s total result from operations as well as the daily charter proceeds. As a consequence, there is no segment reporting. IFRS 8 stipulates segment information to be disclosed even for groups that consist of a single segment. Thus the following information is provided: From chartering out container ships to third-party liner shipping companies, the group generated revenues in the amount of EUR 62,254k in the fiscal year (previous year: EUR 46,712k). For each of the group s 11 (previous year: 9) vessels, there are separate charter agreements with liner shipping companies. However, the group has joined so-called pools with 8 (previous year: 6) ships. In pool arrangements, the revenues of all pool members are pooled, and a pool average is passed over to the individual parties involved. Pool revenues thus do not correspond with the charter rates agreed on with the individual liner shipping companies. As a consequence, no country-specific information can be disclosed for the ships under pool operation. As in the previous year, 3 ships not included in pool arrangements are chartered out to a Denmark-based liner shipping company. Revenues of EUR 31,797k (previous year: EUR 19,854k) were generated from these charter agreements. Unchanged from the previous year, the group s property, plant and equipment in the amount of EUR 450,693k (previous year: EUR 439,862k) exclusively relate to container vessels. These are used worldwide on changing shipping routes. The companies owning these container ships are all based in the country in which the parent maintains its registered office. 51 % (previous year: 43 %) of the revenues were generated with a single client. This client is the world s largest liner shipping company for container vessels. 55

60 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Other disclosures (41) Financial instruments and financial risk management (a) Financial instruments (i) Information on financial instruments The HCI HAMMONIA SHIPPING Group uses a variety of financial instruments. The following table presents the financial assets and liabilities according to the categories for financial instruments as defined by IAS 32 / 39 or rather according to the classification provided by IFRS 7. As for the group, the classification according to IFRS 7 corresponds with the categories of financial instruments according to IAS 32 / 39. In order to allow the reconciliation with items reported in the balance sheet, assets and liabilities outside the scope of definitions of IAS 39 or rather not attributed to any category according to IAS 32 / 39 are reported separately as non-financial assets / non-financial liabilities (NFA / NFL). Assets 31 / 12 / 2009 in EUR 000 Non-current assets Balance sheet AFV HTM LAR AFS NFA Intangible assets Property, plant and equipment 450, ,693 Other assets 1, ,055 Current assets Inventories 1, ,462 Trade receivables Receivables from related parties Income tax receivables Other assets 2, ,248 Receivables from financial derivatives Cash and cash equivalents 15, , Assets 31 / 12 / 2008 in EUR 000 Non-current assets Balance sheet AFV HTM LAR AFS NFA Intangible assets 1, ,770 Property, plant and equipment 439, ,862 Other assets Current assets Inventories 1, ,669 Trade receivables 2, , Receivables from related parties Income tax receivables Other assets Cash and cash equivalents 20, ,

61 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Liabilities 31 / 12 / 2009 in EUR 000 Non-current liabilities Balance sheet LAC LFV DS NFL Financial liabilities 275, , Liabilities from financial derivatives 5, ,193 0 Minority interests 2,964 2, Other liabilities Current liabilities Financial liabilities 30,296 30, Trade payables Payables to related parties Income tax liabilities Other liabilities Liabilities from financial derivatives 5, ,584 0 Liabilities 31 / 12 / 2008 in EUR 000 Non-current liabilities Balance sheet LAC LFV DS NFL Financial liabilities 267, , Liabilities from financial derivatives 16, ,654 0 Minority interests 2,640 2, Other liabilities 1, ,016 Current liabilities Financial liabilities 23,340 23, Trade payables 1,541 1, Payables to related parties Income tax liabilities Other liabilities Liabilities from financial derivatives The categories financial assets at fair value through profit and loss (AFV) and financial liabilities at fair value through profit and loss (LFV) are measured at fair value. The categories AFV and LFV include no financial assets or liabilities held for trading in accordance with IAS 39 but exclusively financial assets or liabilities attributed to said categories upon first-time recognition. Derivatives in hedging relationships are not attributed to any of the categories according to IAS 39. They were therefore attributed to the category derivatives in hedging relationships (DS). The categories loans and receivables (LAR) and financial liabilities measured at amortized cost (LAC) are recognized at amortized acquisition cost. There were no reclassifications between the categories of financial instruments in the fiscal year. 57

62 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements The following table contrasts carrying amounts with fair values for each category of financial assets and liabilities: in EUR 000 IAS 39 category or IFRS 7 class 31 / 12 / 2009 Carrying amount 31 / 12 / 2009 Fair value 31 / 12 / 2008 Carrying amount 31 / 12 / 2008 Fair value Non-current assets Other assets LAR Current assets Trade receivables LAR ,311 2,311 Receivables from related parties LAR Other assets LAR Receivables from financial derivatives AFV Cash and cash equivalents LAR 15,967 15,967 20,643 20,643 Non-current liabilities Financial liabilities LAC 275, , , ,866 Liabilities from financial derivatives DS 5,193 5,193 16,654 16,654 Minority interests LAC 2,964 2,964 2,640 2,640 Current liabilities Financial liabilities LAC 30,296 31,093 23,340 24,330 Trade payables LAC ,541 1,541 Liabilities to related parties LAC Other liabilities LAC Liabilities from financial derivatives DS 5,584 5, Liabilities from financial derivatives LFV Aggregated according to classes / categories Loans and receivables LAR 17,356 17,356 23,016 23,016 Financial assets at fair value through profit and loss AFV Financial liabilities measured at amortised cost LAC 310, , , ,275 Financial liabilities at fair value through profit and loss LFV Derivates in hedging relationships DS 10,777 10,777 16,654 16,654 58

63 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 With regard to unlisted financial instruments with short remaining terms to maturity such as current receivables, cash and cash equivalents, and current liabilities, carrying amounts as of the balance sheet date approximate the respective fair values. With regard to unlisted financial instruments with long remaining terms to maturity such as non-current receivables and liabilities, the fair value corresponds to the respective financial instrument s cash value in application of current interest parameters. As of 31 December 2009, the financial assets and liabilities recognized at fair value can be broken down by fair value hierarchy level as defined by IFRS 7 as follows: Fair-value recognition as of 31 / 12 / 2009 in EUR 000 Total Level 1 Level 2 Level 3 Financial assets Receivables from financial derivatives Fair-value recognition as of 31 / 12 / 2009 in EUR 000 Total Level 1 Level 2 Level 3 Financial liabilities Non-current liabilities 0 Payables from financial derivatives 5, ,193 0 Current liabilities Payables from financial derivatives 5, ,584 0 As of 31 December 2008, the following attributions applied: Fair-value recognition as of 31 / 12 / 2008 in EUR 000 Total Level 1 Level 2 Level 3 Financial assets Receivables from financial derivatives Fair-value recognition as of 31 / 12 / 2008 in EUR 000 Total Level 1 Level 2 Level 3 Financial liabilities Non-current liabilities 0 Payables from financial derivatives 16, ,654 0 Current liabilities Payables from financial derivatives

64 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Net results from financial instruments are allocated to the separate classes or categories of IAS 39 as follows: 2009 From subsequent measurement 2008 in EUR 000 At fair value Currency translation Impairment From disposals Total Recog nized directly in equity Resulting in profit or loss Total Net gains / Net losses Financial assets at fair value through profit or loss (AFV) Loans and Receivables (LAR) , , Financial liabilities at fair value through profit or loss (LFV) Financial liabilities measured at amortised cost (LAC) The net gains / net losses recognized in equity of the category LFV that were stated in the previous year related to differences from currency translation recognized directly in equity. Currency translation expenses incurred for the year 2009 and included in the category LAR essentially relate to exchange rate loss in cash and cah equivalents (EUR -558k). The interest result included in measurement category LAC is essentially ccounted for by ship mortgage loans. Interest income or interest expenses relating to financial assets or liabilities not recognized at fair value resulting in profit or loss and determined according to the effective interest method came to the following amounts in the two past fiscal years: in EUR Interest income 330 1,407 Interest expense 16,169 8,594 Income and expenses relating to fees and commission not included in the calculation of the effective interest rate do not apply for this fiscal year and the previous one. In the past fiscal year and the previous year, no interest income attributed to impaired financial assets in accordance with IAS 39.AG 93 had to be recognized. (ii) Information on derivative financial instruments Due to its global scope of business activities, the HCI HAMMONIA SHIPPING Group is particularly exposed to risks of changes in interest and exchange rates. In order to contain these risks, derivative financial instruments are used. of existing underlying transactions as well as of planned transactions with sufficiently high probability of occurrence. Said binding guidelines determine the executives responsible, the scope of action, and reporting duties. According to these guidelines, commercial transactions involving derivative financial instruments may only be concluded with banking institutions that have excellent credit ratings. The HCI HAMMONIA SHIPPING Group uses forward exchange transactions to hedge concluded or expected underlying transactions. Within the framework of interest hedge, risks are contained by interest derivatives in the form of interest rate swaps. The use of derivative financial instruments within the HCI HAMMONIA SHIPPING Group is regulated by corresponding guidelines and exclusively serves the hedging 60

65 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Face amounts and fair values of interest and currency derivatives can be broken down as follows: 31 / 12 / / 12 / 2008 in EUR 000 Face amount Fair value Face amount Fair value Assets Currency derivatives Interest derivatives Total Liabilities Currency derivatives 0 0 2, Interest derivatives 181,113 10, ,928 16,654 Total 181,113 10, ,428 16,777 (iii) Information on hedging relationships The HCI HAMMONIA SHIPPING Group recognizes certain derivatives that meet the criteria defined by IAS 39 for the designation of hedging relationships as cash flow hedges in accordance with IAS 39. Cash flow hedges are made to hedge interest rate risks in connection with variable cash flows. The effectiveness of the hedges is assessed as of the balance sheet date in application of the dollar offset method (benchmark approach). As of 31 December 2009 the following material hedging relationships meet the requirements of IAS 39 for the disclosure as cash flow hedges: Hedged item Hedge Disbursement 31 / 12 / 2009 Interest rate Maturity Face amount 31 / 12 / 2009 Interest rate % Current value Type Term to maturity USD 000 USD 000 EUR 000 Beginning End 10,000 USD-LIBOR + margin 30 / 01 / , Interest rate swap 30 / 01 / / 01 / ,000 USD-LIBOR + margin 12 / 01 / , Interest rate swap 12 / 01 / / 01 / ,000 USD-LIBOR + margin 10 / 01 / , Interest rate swap 12 / 01 / / 01 / ,000 USD-LIBOR + margin 12 / 01 / , Interest rate swap 02 / 04 / / 01 / ,784 USD-LIBOR + margin 03 / 01 / , Interest rate swap 02 / 01 / / 01 / ,670 USD-LIBOR + margin 29 / 11 / , Interest rate swap 29 / 08 / / 08 / ,374 USD-LIBOR + margin 31 / 12 / , Interest rate swap 31 / 12 / / 12 / ,538 USD-LIBOR + margin 28 / 02 / , Interest rate swap 29 / 08 / / 08 / ,961 USD-LIBOR + margin 30 / 05 / , ,796 Interest rate swap 30 / 05 / / 05 / ,961 USD-LIBOR + margin 30 / 05 / , ,906 Interest rate swap 30 / 05 / / 05 / ,711 USD-LIBOR + margin 30 / 05 / , ,644 Interest rate swap 30 / 05 / / 05 / ,777 61

66 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements As of 31 December 2008 the following material hedging relationships meet the requirements of IAS 39 for the disclosure as cash flow hedges: Hedged item Hedge Disbursement 31 / 12 / 2008 Interest rate Maturity Face amount 31 / 12 / 2008 Interest rate % Current value Type Term to maturity USD 000 USD 000 EUR 000 Beginning End 10,000 USD-LIBOR + margin 30 / 01 / , Interest rate swap 30 / 01 / / 01 / ,000 USD-LIBOR + margin 12 / 01 / , Interest rate swap 12 / 01 / / 01 / ,000 USD-LIBOR + margin 10 / 01 / , Interest rate swap 10 / 01 / / 01 / ,000 USD-LIBOR + margin 12 / 01 / , Interest rate swap 12 / 01 / / 01 / ,322 USD-LIBOR + margin 03 / 01 / , Interest rate swap 02 / 09 / / 01 / ,693 USD-LIBOR + margin 29 / 11 / , Interest rate swap 29 / 08 / / 08 / ,964 USD-LIBOR + margin 31 / 12 / , Interest rate swap 31 / 12 / / 12 / ,135 USD-LIBOR + margin 28 / 02 / , Interest rate swap 29 / 08 / / 08 / ,192 USD-LIBOR + margin 30 / 05 / , ,707 Interest rate swap 30 / 05 / / 05 / ,192 USD-LIBOR + margin 30 / 05 / , ,828 Interest rate swap 30 / 05 / / 05 / ,942 USD-LIBOR + margin 30 / 05 / , ,459 Interest rate swap 30 / 05 / / 05 / ,654 Current values of interest rate swaps are determined according to the mark-to-market method. Measurements are based on interest yields of approx. 1.0 % (1 year; previous year: 1.2 %), approx. 1.4 % (2 years; previous year: 1.4 %), approx. 3.0 % (5 years; previous year: 2.1 %), and up to approx. 4.0 % (10 years; previous year: 2.5 %). In the fiscal year fair value changes of interest rate swaps were recognized directly in equity in the amount of EUR 8,614k (previous year: EUR -16,072k). EUR 5,920k (previous year: EUR 1,023k) were transferred from equity to the income statement (interest expenses) in the fiscal year. In the years of comparison no inefficiencies had to be recorded with respect to hedging relationships. (iv) Information on delayed payments and contract violations In fiscal year 2009 the group came to an agreement with a bank consortium on alleged violations of contractual obligations with respect to individual ship mortgage loans. Contrary to HCI HAMMONIA SHIPPING AG and three subsidiaries involved, a bank consortium held the view that obligations under loan agreements (loan-to-value ratio) had been violated. In order to avoid a potential legal dispute with an important financing partner from the start, the group had agreed to a waiver agreement without prejudice to its own legal position. In return, the bank consortium waived taking action with respect to potential obligations under loan agreements for the next twelve months. Apart from an increased credit margin, the agreement stipulates that HCI HAMMONIA SHIPPING AG as the involved subsidiaries parent company may withdraw liquid funds only if the respective subsidiaries remaining cash balances and unused overdraft facilities exceed a total amout of USD 3,250k. The subsidiaries involved have unrestricted disposal of the respective cash balances. The term of the agreement extends from 1 October 2009 to 30 September Due to the increased margin, additional interest expenses in the amount of roughly USD 1.5 million will incur for the group in said period. In agreement with the respective financing credit institutions, the group deferred one redemption payment each relating to two ship mortgage loans in fiscal year 2009 (tolerated deferments). The deferred payments amount to altogether EUR 760k. The loans affected by the deferred redemption payments were valued at altogether EUR 36,729k as of 31 December 2009, including the deferred instalments. The group intends to defer 8 payments altogether on each loan. Final agreements on the deferment of 8 payments each had not been concluded with the respective financing banks by the time of the preparation of the consolidated financial statements. With respect to one loan in the amount of EUR 18,308k, the credit institution used the deferred payment as an opportunity to raise the credit margin for the entire loan. With respect to the other ship mortgage loan, the credit 62

67 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 institution merely imposed increased default interest on the outstanding redemption payment of EUR 401k as of the balance sheet date and left the credit conditions otherwise unchanged. (b) Financial risk management The HCI HAMMONIA SHIPPING Group has a central risk management system for the identification, measurement, and control of risks. With respect to payments made or received or planned to be made or received throughout the group, risk exposures result from market risks (interest rate risks and currency risks), credit risks, and liquidity risks. Interest rate risks are controlled through a combination of fixed and variable interest items (through entering into interest rate hedges). Currency risks from anticipated payments in foreign currency are contained by the use of currency hedges and similar instruments. Risks resulting from fluctuations on the charter markets are reduced by operating the seagoing vessels in pool arrangements and the careful selection of charterers. Liquidity risks are managed by the group-wide controlling of anticipated income and expenses as well as through lines of credit. (i) Financial risks Due to the international scope of its business operations, the HCI HAMMONIA SHIPPING Group is exposed to a number of financial risks. These especially include the effects of changes in exchange rates and interest rates. These risks are reduced within the framework of the existing risk management process. Currency risk Due to the fact that the major part of income and expenses connected with business activities relates to one currency (USD), the group s currency risk resulting from exchange rate fluctuations is altogether limited. The USD is the functional currency of the single-ship limited partnerships. Currency risks here merely concern the measurement of cash and cash equivalents held in EUR and trade payables made out in EUR. The functional currency of HCI HAMMONIA SHIPPING AG is the euro (EUR). The payment of administrative costs and, above all, distributions to the shareholders of HCI HAMMONIA SHIPPING AG are made in EUR. Significant currency risks exist for the group on the one hand with respect to the transformation of equity capital raised on the level of HCI HAMMONIA SHIPPING AG within the scope of capital increases into USD to be used as own funds for the purchase of seagoing vessels. On the other hand, currency risks exist with respect to surpluses generated in USD on the level of the single-ship limited partnerships that have to be transformed into EUR to be used by HCI HAMMONIA SHIPPING AG for the payment of own costs as well as for distributions to the shareholders. In order to contain these risks, the group generally applies currency hedges. Currency risks within the meaning of IFRS 7 arise from primary and derivative monetary financial instruments whose currency of issue is different from the company s functional currency. For the determination of sensitivities presented in the following table, a hypothetical currency devaluation or revaluation of the EUR in relation to the USD as of 31 December 2009 and 31 December 2008 by 10 % is assumed. All other variables remain unchanged. On these conditions, the following material effects on earnings (EBT) and equity of the HCI HAMMONIA SHIPPING Group would have resulted: Earnings Equity in EUR 000 % USD exchange rate fluctuation Interest rate risk Risks resulting from interest rate changes generally exist for the HCI HAMMONIA SHIPPING Group in connection with loans taken out for financing the purchase of seagoing vessels. the risk of interest rate changes due to the variable-interest portion of loans taken out, the group entered into interest rate hedges (interest rate swaps). The interest rate hedges are designated as cash flow hedges and were deemed fully effective as of the balance sheet date. The loan agreements provide for variable interest rates for future loans payable for the most part. In order to reduce 63

68 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements A hypothetical increase or decrease of the market interest level by 50 basis points (parallel translation of the interest curves), respectively, and otherwise unchanged variables would have the following effects on earnings (EBT) and equity, affecting the financial result: Earnings Equity in EUR 000 Basis points Adjustment of the interest level ,751 3, ,873-3,788 Due to the low interest level in fiscal year 2009 with interest rates below 0.5 % for 3-month LIBOR, the effects of an upward and downward adjustment by 50 basis points are different. The disproportionate effect of an increase or decrease in the market interest level on equity results from the reproduction of the current values of interest rate swaps in equity insofar as these are designated as hedging instruments in cash flow hedges. (ii) Default risk The HCI HAMMONIA SHIPPING Group is exposed to the risk that business partners cannot fulfill their obligations. In order to reduce this risk of default, the maximum amount of which corresponds to the carrying amounts recognized for the respective financial assets, appraisals of creditworthiness are carried out. For identifiable default risks especially with regard to trade receivables, adequate valuation allowances are made. Changes in valuation allowances made for trade receivables are as follows: in EUR January 0 0 Appropriation 1,984 0 Utilization 0 0 Reversal December 1,984 0 The criteria considered for the creation of valuation allowances are the length of time the individual receivable has been overdue and, in the individual case, an assessment of the customer s (i. e. charterer s) financial position and payment history. The valuation allowances created relate to receivables from charterers, written down completely according to the aforementioned criteria. An impaired receivable is derecognized if facts indicate that the receivable must be classified as irrecoverable. This is the case e. g. if the customer is insolvent. The valuation allowances created relate to receivables that have not been classified as irrecoverable. Impairment loss was therefore considered through allowance accounts. For an assessment whether there is a risk concentration, receivables subject to default risk and relating to individual customers are summarized if it has been established that those customers are affiliates of a group of companies. Apart from the receivables that have already been written down completely, no other default risks or risk concentrations have been identified. 64

69 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 The theoretical maximum default risk comes to the following amount: in EUR / 12 / / 12 / 2008 Trade receivables 947 2,311 Receivables from related parties 0 50 Other financial assets Receivables from financial derivatives 12 0 Cash and cash equivalents 15,967 20,643 Maximum default risk 17,368 23,005 Trade receivables are for the most part receivables from pool arrangements and liner shipping companies. They are not hedged by any special instruments. Bank deposits are held only at partners with impeccable credit ratings. Financial assets that were not impaired but overdue as of the balance sheet date can be broken down as follows: thereof: neither impaired nor overdue as of the balance sheet date thereof: not impaired as of the balance sheet date and overdue in the following time bands in EUR 000 Carrying amount Less than 30 days Between 30 and 60 days Between 61 and 90 days Between 91 and 180 days Between 181 and 360 days More than 360 days Trade receivables 31 December December ,311 2, Receivables from related parties 31 December December Other financial assets 31 December December (iii) Liquidity risk Liquidity management safeguards the maintenance of liquidity within the HCI HAMMONIA SHIPPING Group at any given time. It makes sure that cash and cash equivalents are available in a sufficient amount to cover business operations and investments at any time. The minimizing of financing costs is a significant additional prerequisite to an efficient financing management. Generally speaking, open items are intended to be refinanced in matching maturities. As refinancing instruments, cash or capital market products such as loans or guarantees can be utilized. The required basic data are determined through monthly rolling liquidity planning with a planning horizon to the end of the current year and on an annual basis beyond that. Liquidity planning is subject to periodical deviation analyses. 65

70 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements The following table presents the contractually agreed undiscounted interest and redemption payments on primary financial liabilities and derivative financial instruments with negative fair value or rather derivatives in hedging relationships: Carrying amount Cash flows up to 1 year Cash flows 1 to 5 years Cash flows more than 5 years in EUR / 12 / 2009 Interest Redemption Interest Redemption Interest Redemption Primary financial liabilities Financing liabilities 306,109 8,920 30,591 28,293 98,937 17, ,395 Minority interests 2, ,939 Trade payables Liabilities to related parties Other liabilities Derivative financial liabilities Liabilities from financial derivatives Derivatives in hedging relationships ,777 5, , ,956 0 Included were all instruments held as of 31 December 2009 and for which payments were already contractually agreed. Amounts in foreign currency were translated at the balance sheet exchange rate. The variable interest payments relating to financial instruments were determined on the basis of the most recently fixed interest rates prior to 31 December The net payments from interest rate swaps were calculated in consideration of the futures rates that form the basis of measurement. Financial liabilities repayable at any time are attributed to the narrowest time band. The corresponding data as of 31 December 2008 follow in the next table: Carrying amount Cash flows up to 1 year Cash flows 1 to 5 years Cash flows more than 5 years in EUR / 12 / 2008 Interest Redemption Interest 31 / 12 / 2009 Interest Redemption Primary financial liabilities Financing liabilities 290,778 10,368 23,689 33,649 91,658 24, ,367 Minority interests 2, ,514 Trade payables 1, , Liabilities to related parties Other liabilities Derivative financial liabilities Liabilities from financial derivatives Derivatives in hedging relationships ,654 3, , ,

71 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 (iv) Capital management The capital management of the HCI HAMMONIA SHIP- PING Group is primarily oriented towards maintaining a strong equity base. The Management Board regularly reviews net indebtedness. The following table presents shareholders equity, equity-to-assets ratio, and net financial indebtedness: 31 / 12 / / 12 / 2008 Change Shareholders equity in EUR , ,216-2,094 Equity-to-assets ratio in % Net financial indebtedness / Net financial surplus in EUR , ,136-20,006 Net financial indebtedness is calculated as the difference between financial liabilities and cash and cash equivalents. The increase in net financial indebtedness compared to the previous year essentially results from the investments in seagoing vessels made in the fiscal year and the loans taken out for financing these investments. The objectives of capital management are considered achieved in the fiscal years of comparison. Furthermore, the capital management of the HCI HAM- MONIA SHIPPING Group is also aimed at the dividend level as the HCI HAMMONIA SHIPPING Group seeks to provide its shareholders with an adequate dividend yield. In fiscal year 2009, the group s parent company distributed a dividend in the amount of EUR 2,728k to its shareholders. Based on the share capital and capital reserve of HCI HAMMONIA SHIPPING AG, this equals a dividend yield of 1.82%. The Management Board aims for a dividend yield of 6.5% in the medium term. HCI HAMMONIA SHIPPING AG is not subject to statutory capital requirements. In particular, the company does not have any obligation to dispose of or otherwise issue shares in connection with existing share-based payment schemes or convertible bonds. Please refer to note (15) for information on authorized capital. (42) Operating leases The charter transactions recorded under the item revenues involve so-called operating leases in accordance with IAS in conjunction with IAS The operating leases relate to different types of charter transactions. The ships of the 7,800 TEU class are chartered out to the world s largest container liner shipping company under long-term time charters. The ships of the 2,500 TEU and 3,100 TEU classes are operated in two respective pool arrangements. Under these arrangements, the individual ships enter into individual charter agreements with liner shipping companies; however, the revenues of all pool ships are pooled, and a charter rate is paid out to the pool members calculated as the average of all pool partners involved. Future pool rates are thus dependent on the follow-up charter contracts of the pool partners involved. Therefore the exact amount of pool rates realizable for the HCI HAMMONIA SHIPPING Group in the next years from the membership in the two pool arrangements is uncertain. The following table presents the future minimum charter rates in accordance with IAS (a), determined exclusively on the basis of binding pool charter agreements (not including follow-up charters) and the directly realizable charter rates from time charters, arranged according to terms to maturity: Minimum lease rates EUR 000 Up to 1 year 1-5 years > 5 years Total 47, ,112 96, ,891 (previous year) 65, , , ,473 67

72 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Charter agreements are concluded at customary conditions and include cost transfer with respect to ship personnel, insurance, and other vessel operating costs, not including fuels and other ship travel cost, to the owner. The company collected EUR 62,254k from operating leases in fiscal year 2009 (previous year: EUR 46,712k). (43) Other financial obligations As of the balance sheet date, there are other financial obligations of EUR 1,553k per year arising from the agreement for consultancy and other services concluded with HCI Hanseatische Schiffsconsult GmbH (from 1 October 2009: HAMMONIA Reederei GmbH & Co. KG, Hamburg). These are determined on the basis of an annual rate of 1.0 % of the respective equity capital of HCI HAMMONIA SHIPPING AG. The contract has a remaining term of 17.5 years as of the balance sheet date. Including advance payments, the sum of financial obligations thus amounts to EUR 24,460k as of the balance sheet date. (44) Related party disclosures a) General information In accordance with IAS 24, related parties of the HCI HAMMONIA SHIPPING Group are individuals and companies that either control the group or have a significant influence over the group, or are controlled by the group or are subject to its significant influence. One of the managing directors of HCI Hanseatische Schiffs consult GmbH is also a member of the Management Board of HCI HAMMONIA SHIPPING AG. HCI Hanseatische Schiffsconsult GmbH and the affiliated companies of the HCI Group are therefore considered related parties. HAMMONIA Reederei GmbH & Co. KG and its affiliates are considered related parties due to the fact that the company is the contractual ship operator and managing limited partner of the single-ship limited partnerships, and because one of its managing directors is also a member of the Management Board of HCI HAMMONIA SHIPPING AG. Moreover, the members of the Management Board and the Supervisory Board of HCI HAMMONIA SHIPPING AG are related parties, as are the subsidiaries of the HCI HAM- MONIA SHIPPING Group. In addition to the business relationships with the subsidiaries included in the consolidated financial statements by way of full consolidation, the following business relationships existed with related parties. (b) Relationships with HCI Hanseatische Schiffsconsult GmbH The following business relationships existed with HCI Hanseatische Schiffsconsult GmbH and its affiliates in the years of comparison: Income statement (in EUR 000) Other operating expenses 1,151 1,451 HCI HAMMONIA SHIPPING AG concluded an agreement with HCI Hanseatische Schiffsconsult GmbH on the provision of controlling and administrative services and other services with a term of 20 years (service agreement) effective 1 July 2007, according to which HCI Hanseatische Schiffsconsult GmbH receives a consideration in the amount of 1.0 % per annum of the company s respective equity for the purpose of Section 266 (3) letter a HGB (Commercial Code) plus any applicable sales tax. The payment is due in proportionate amounts at the end of each quarter on the basis of the company s equity as of the end of the preceding quarter as reported for that quarter in the respective interim financial statements. Effective 1 October 2009, HCI Hanseatische Schiffsconsult GmbH has assigned its rights under said agreement to HAM- MONIA Reederei GmbH & Co. KG. HCI Hanseatische Schiffsconsult GmbH committed itself to HAMMONIA Reederei GmbH & Co. KG until 30 December 2014 to render the contractually agreed services to HCI HAM- MONIA SHIPPING AG. HCI Hanseatische Schiffsconsult GmbH has the option to repurchase and adopt the service agreement from HAMMONIA Reederei GmbH & Co. KG in the period from 1 October 2010 to 31 December 2014, subject to the approval of HCI HAMMONIA SHIP- PING AG. 68

73 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 (c) Relationships with HAMMONIA Reederei (c) GmbH & Co. KG The following business relationships existed with HAM- MONIA Reederei GmbH & Co. KG and its affiliates in the years of comparison: Balance sheet (in EUR 000) 31 / 12 / / 12 / 2008 Receivables from HAMMONIA Reederei GmbH & Co. KG and its affiliates 0 50 Payables to HAMMONIA Reederei GmbH & Co. KG and its affiliates Income statement (in EUR 000) Vessel operating costs (operating fees) 2,585 1,903 Other operating expenses (organization cost) Other operating expenses (service fee) HCI HAMMONIA SHIPPING AG concluded an agreement with HAMMONIA Reederei GmbH & Co. KG on the cooperation on the level of the single-ship limited partnerships (in the following: cooperation agreement ). Pursuant to the cooperation agreement, HAMMONIA Reederei GmbH & Co. KG concludes ship operating contracts with the singleship limited partnerships under which the company provides the customary ship operating services and receives a consideration of 4 % of the collected gross freight revenues. With respect to new ship constructions, HAMMO- NIA Reederei GmbH & Co. KG as contractual ship operator receives EUR 125k in the first year of operation for increased ship operation expenses from the respective single-ship limited partnership. For preparatory ship operation, HAMMONIA Reederei GmbH & Co. KG receives EUR 25k from the respective single-ship limited partnerships whether new ships or ships bought second-hand are concerned. As compensation for increased ship operating expenses and advisory services in connection with the sale of a vessel or in the context of liquidation proceedings in case of a total loss, HAMMONIA Reederei GmbH & Co. KG receives a lump-sum payment of 2 % of the gross sales proceeds or the insurance benefit payment plus applicable sales tax from the respective subsidiary. The compensation does not have to be paid if the vessel is sold to HAMMONIA Reederei GmbH & Co. KG or a related party of HAMMONIA Reederei GmbH & Co. KG. This also applies if HAMMONIA Reederei GmbH & Co. KG exercises an existing purchase option. A decision on the sale of the ships is subject to the approval of all partners within the first 10 years following acquisition of the vessels. The partners of the single-ship limited partnerships have determined that any disposal of the vessels during the above-mentioned period shall only be made in exceptional circumstances. In view of its status as contractual ship operator, HAMMONIA Reederei GmbH & Co. KG is always entitled to withhold its approval to the disposal of the vessels during said period unless the purchaser is willing to acquire the ship operating agreement as well as the chartering agreement concluded with Peter Döhle Schiffahrts-KG, or to conclude these agreements at the same conditions anew, and the purchaser imposes this assumption obligation upon potential legal successors. Any decision made on the disposal of the vessels after this period of 10 years is subject to the approval of the service company, HCI Hanseatische Schiffsconsult GmbH. HCI Hanseatische Schiffsconsult GmbH has to withhold its approval if the provisions with respect to a purchase option in favor of HAMMONIA Reederei GmbH & Co. KG have not been observed or if the minimum sale price to be determined by the decision is below the current market value. As managing limited partner of the single-ship limited partnerships, HAMMONIA Reederei GmbH & Co. KG assumes their respective management and represents them in legal transactions. For its management services, HAMMONIA Reederei GmbH & Co. KG receives a preference share in profits from the respective single-ship limited partnership. In the years of comparison, no claim to a preference share in profits was accrued. HAMMONIA Reederei GmbH & Co. KG acquired the contractual rights under a service agreement concluded with HCI HAMMONIA SHIPPING AG from HCI Hanseatische Schiffsconsult GmbH effective 1 October Please compare note (44) (a) for the particulars of this service agreement. As of 1 October 2009, HCI HAMMONIA SHIP- PING AG made an advance payment in the amount of EUR 2,600k for eight quarters, i. e. until 30 September This advance payment involves a considerable interest-rate advantage of at least 10 % (the precise amount is dependent on the equity of HCI HAMMONIA SHIPPING AG as of the end of the respective previous quarter). HAMMONIA Reederei GmbH & Co. KG receives a financing intermediation fee of EUR 200k or rather EUR 100k 69

74 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements per loan agreement for the intermediation of low-interest CEXIM financing for funding the purchases of the seagoing vessels MS HAMMONIA Bavaria, MS HAMMONIA HOL- SATIA, MS HAMMONIA MASSILIA, MS HAMMONIA ROMA, MS HAMMONIA TEUTONICA, and MS HAM- MONIA POMERENIA. In fiscal year 2009 HAMMONIA Reederei GmbH & Co. KG received total intermediation fees of EUR 300k (previous year: EUR 600k), to be amortized over the terms of the loan agreements. In the years of comparison, the group made the following payments or advance payments for new ships to subsidiaries of HAMMONIA Reederei GmbH & Co. KG: Purchase prices Seagoing vessel USD 000 EUR 000 USD 000 EUR 000 MS TEUTONICA , MS HOLSATIA , MS MASSILIA , MS BAVARIA 25,540 2,731 10,899 8,046 MS ROMA 38, ,926 0 (d) Related persons Balance sheet (in EUR 000) 31 / 12 / / 12 / 2008 Payables to corporate bodies of the HCI HAMMONIA SHIPPING Group 5 5 Income statement (in EUR 000) Other operating expenses Members of the Supervisory Board receive a fixed annual compensation of EUR 5, each in accordance with the articles of incorporation. The chairman of the Supervisory Board receives one and a half times this amount. In addition, the members of the Supervisory Boar are reimbursed for expenses incurred in connection with Supervisory Board activity as well as sales tax payable for the Supervisory Board compensation. The total remuneration paid to members of the Supervisory Board for fiscal year 2009 amounts to EUR 18k (previous year: EUR 18k). The Management Board did not receive any remuneration in fiscal years 2009 and Moreover, above-mentioned persons were neither granted advances nor loans, nor did contingencies exist in favor of these persons. (45) Company boards (a) Management Board The following persons were appointed members of the company s Management Board in the fiscal year: Dr. Karsten Liebing, managing director of HAMMONIA Reederei GmbH & Co. KG, Hamburg, jens Burgemeister, managing director of HCI Hanseatische Schiffsconsult GmbH, Hamburg (until 31 December 2009) jan Krutemeier, managing director of HCI Hanseatische Schiffsconsult GmbH, Hamburg (since 1 January 2010) 70

75 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 (b) Supervisory Board The Supervisory Board consists of the following members: Werner Berg, managing director of AKTIVA Beteiligungs- und Verwaltungs-GmbH and PROKURATOR GmbH, both Berlin (chairman) Michael Hummel, head of capital investments of Sparkasse Vogtland, Auerbach (deputy chairman) Andreas Uibeleisen, bank manager of KfW (ret.), Bad Homburg Werner Berg is a member of the supervisory boards of the following companies: Nau Real Estate Group AG, Berlin (chairman) Werner Berg is a member of the advisory boards of the following companies: CENTRO PARK KG KAWI Grundstücksverwaltungs- GmbH & Co. (chairman) Schiffahrtsgesellschaft HANSA CENTAUR mbh & Co. KG (chairman) CTO Gesellschaft für Containertransport mbh & Co. KG MS NAUPLIUS (chairman) CTO Gesellschaft für Containertransport mbh & Co. KG MS TEGESOS (chairman) CTO Gesellschaft für Containertransport mbh & Co. KG MS CHAMPION (chairman) Beteiligungs-Kommanditgesellschaft MS BUXHANSA Verwaltungs- und Bereederungs GmbH & Co. Beteiligungs-Kommanditgesellschaft MS BUXFA- VOURITE Verwaltungs- und Bereederungs GmbH & Co. Beteiligungs-Kommanditgesellschaft MS BRÜSSEL Verwaltungs- und Bereederungs GmbH & Co. Beteiligungsgesellschaft LARENTIA + MINERVA mbh & Co. KG (chairman) MT BEN FLOR GmbH & Co. KG MT BEATRICE GmbH & Co. KG Hermann Buss GmbH & Co. KG MS EMS TRADER (chairman) MS E. R. SEOUL Schiffahrtsgesellschaft mbh & Co. KG (chairman) MS E. R. SHENZHEN Schiffahrtsgesellschaft mbh & Co. KG (chairman) MS E. R. YANTIAN Schiffahrtsgesellschaft mbh & Co. KG (chairman) MS E. R. LONG BEACH Schiffahrtsgesellschaft mbh & Co. KG MS E. R. TIANSHAN Schiffahrtsgesellschaft mbh & Co. KG MS E. R. TEXAS Schiffahrtsgesellschaft mbh & Co. KG Reederei MS E. R. LOS ANGELES Beteiligungsgesellschaft mbh & Co. KG (chairman) Reederei MS E. R. SWEDEN Beteiligungsgesellschaft mbh & Co. KG Reederei MS E. R. LONDON Beteiligungsgesellschaft mbh & Co. KG Schiffsportfolio Global 1 (chairman) Schiffsportfolio Global 2 (chairman) Ocean Shipping I GmbH & Co. KG (chairman) NORDCAPITAL Offshore Fonds 1 Michael Hummel is a member of the administrative boards of the following companies: Sparkasse Vogtland Andreas Uibeleisen is a member of the advisory boards of the following companies: Schiffahrtsgesellschaft Wappen von Frankfurt mbh & Co.KG HCI Hammonia I GmbH & Co.KG Reederei MS Reinbek GmbH & Co.KG Conti 7. Beteiligungsfonds GmbH & Co.KG 71

76 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements (46) Costs of the audit of financial statements The total fees of the auditor HANSA PARTNER GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, can be broken down as follows: in EUR Auditing services Other certification services Tax consultancy services 0 0 Other services 0 0 Total The amount of auditing services stated for fiscal year 2009 includes EUR 10k for the prior-year audit.(47) Corporate Governance Kodex (47) Corporate Governance Code Management Board and Supervisory Board of HCI HAM- MONIA SHIPPING AG declare that the recommendations of the Government Commission German Corporate Governance Code have with few exceptions been complied with and will be complied with in the future. The German declaration of compliance stipulated under Section 161 AktG (Stock Corporation Act) was released by the Management Board and the Supervisory Board on 9 December 2009 and made permanently available to the shareholders on the Web site of HCI HAMMONIA SHIPPING AG at / userfiles / downloads / ir_downloads / _Entsprechenserklaerung.pdf. (48) Disclosures of shareholdings in accordance with Sections 21 et seq. WpHG As of the preparation of the consolidated financial statements, HCI HAMMONIA SHIPPING AG had received the following notifications of reportable shareholdings pursuant to Section 21 WpHG (Securities Trading Act): Sparkasse Hildesheim, Hildesheim, Germany, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.30 % (4,500 voting rights) as of 26 November In accordance with Section 22 (1) sentence 1 no. 6 WpHG, 3.30 % (4,500 voting rights) are attributable to Sparkasse Hildesheim. Debeka Lebensversicherungsverein a.g., Koblenz, Germany, notified us on 3 December 2007 pursuant to Section 21 (1a) WpHG that it held a share in the voting rights of 6.66 % (9,090 voting rights) as of 26 November 2007, the date of first-time admission of the shares of HCI HAM- MONIA SHIPPING AG, Hamburg, Germany, to trading. Debeka Krankenversicherungsverein a.g., Koblenz, Germany, notified us on 3 December 2007 pursuant to Section 21 (1a) WpHG that it held a share in the voting rights of 6.66 % (9,090 voting rights) as of the date of first-time admission of the shares of HCI HAMMONIA SHIPPING AG, Hamburg, Germany to trading on November 26, Sparkasse Singen-Radolfzell, Singen, Germany, notified us on 5 December 2007 pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMO- NIA SHIPPING AG, Hamburg, Germany, came to 3.33 % (4,545 voting rights) as of 26 November Deutscher Ring Lebensversicherungs-AG, Hamburg, Germany, notified us on 6 December 2007 pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to % (8,180 voting rights) as of 26 November Deutscher Ring Krankenversicherungsverein a.g., Hamburg, Germany, notified us on 6 December 2007 pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to % (5,450 voting rights) as of 26 November HAMMONIA Reederei GmbH & Co. KG, Hamburg, Germany, notified us on 5 December 2007 pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 9.86 % (13,452 voting rights) as of the date of first-time admission of the shares to trading on 26 November In accordance with Section 22 (1) sentence 1 nos. 2 and 6 WpHG, the share of the voting rights is attributed to HAM- MONIA Reederei GmbH & Co. KG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany. 72

77 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Döhle ICL Beteiligungsgesellschaft mbh, Hamburg, Germany, notified us pursuant to Section 21 (1a) WpHG that it had acquired a share in the voting rights of HCI HAM- MONIA SHIPPING AG, Hamburg, Germany that came to 3.33 % (4,546 voting rights) as of the date of first-time admission of the shares to trading on 26 November Jochen Döhle, Germany, notified us on 6 December 2007 pursuant to Section 21 (1a) WpHG that he had acquired a share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, that came to % (18,498 voting rights) as of the date of first-time admission of the shares to trading on 26 November According to Section 22 (1) sentence 1 no. 1 WpHG, the voting rights of 3.33 % (4,546 voting rights) held by Döhle ICL Beteiligungsgesellschaft mbh, Hamburg, Germany, entered in the register of companies at the District Court (Amtsgericht) Hamburg under no. HRB 85804, are attributable to Jochen Döhle; Peter Döhle Schiffahrts-KG, Hamburg, Germany, holds an interest of 100 % in Döhle ICL Beteiligungsgesellschaft mbh, Hamburg, Germany, and Jochen Döhle holds an interest of 100 % in the managing partner of Peter Döhle Schiffahrts-KG, Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbh, Hamburg, Germany. In addition, a share in the voting rights of 9.86 % (13,452 voting rights) is attributed to Jochen Döhle pursuant to Section 22 (1) sentence 1 nos. 2 and 6; sentence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany. Peter Döhle Schiffahrts-KG, Hamburg, Germany, notified us on 6 December 2007 pursuant to Section 21 (1a) WpHG that it had acquired a share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, that came to % (17,998 voting rights) as of the date of first-time admission of the shares to trading on 26 November According to Section 22 (1) sentence 1 no. 1 WpHG, a share in the voting rights of 3.33 % (4,546 voting rights) held by Döhle ICL Beteiligungsgesellschaft mbh, Hamburg, Germany, entered in the register of companies at the District Court (Amtsgericht) Hamburg under no. HRB 85804, in which Peter Döhle Schiffahrts-KG holds an interest of 100 %, is attributed to Peter Döhle Schiffahrts-KG. In addition, a share in the voting rights of 9.86 % (13,452 voting rights) is attributed to Peter Döhle Schiffahrts-KG pursuant Section 22 (1) sentence 1 nos. 2 and 6; sentence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany. Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbh, Hamburg, Germany, notified us on 6 December 2007 pursuant to Section 21 (1a) WpHG that it had acquired a share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, that came to % (17,998 voting rights) as of the date of first-time admission of the shares to trading on 26 November According to Section 22 (1) sentence 1 no. 1 WpHG, a share in the voting rights of 3.33 % (4,546 voting rights) is attributed to Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbh that are held by Döhle ICL Beteiligungsgesellschaft mbh, Hamburg, Germany, entered in the register of companies at the District Court (Amtsgericht) Hamburg under no. HRB 85804, in which Peter Döhle Schiffahrts-KG, Hamburg, Germany, whose managing partner is Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbh, holds an interest of 100 %. In addition, a share in the voting rights of 9.86 % (13,452 voting rights) is attributed to Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbh pursuant to Section 22 (1) sentence 1 nos. 2 and 6; sentence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany. MLP AG, Wiesloch, Germany, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as of 26 November The share of 3.67 % (5,000 voting rights) is attributed to MPL AG in accordance with Section 22 (1) sentence 1 no. 2 WpHG. The voting rights attributed to MLP AG are held by the following companies, whose respective shares in the voting rights of HCI HAMMONIA SHIPPING AG come to 3 % or more, controlled by MLP AG: Feri Finance AG, Feri Institutional Advisors GmbH, Ferrum Pension Management S.a.r.l. Feri Finance AG, Bad Homburg, Germany, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as of 26 November The share of 3.67 % (5,000 voting rights) is attributed to Feri Finance AG in accordance with Section 22 (1) sentence 1 no. 1 WpHG. The voting rights attributed to Feri Finance AG are held by the following companies, whose respective shares in the voting rights of HCI Hammonia Shipping AG come to 3 % or more, controlled by Feri Finance AG: Feri Institutional Advisors GmbH, Ferrum Pension Management S.a.r.l. Feri Institutional Advisors GmbH, Bad Homburg, Germany, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as of 26 November The share of 3.67 % (5,000 voting rights) is attributed to Feri Institutional Advisors GmbH in accordance with Section 22 (1) sentence 1 no. 1 WpHG. The voting rights attributed to Feri Institutional Advisors GmbH are held by the following company, whose share in the voting rights of HCI Hammonia Shipping AG comes to 3 % or more, controlled by Feri Institutional Advisors GmbH: Ferrum Pension Management S.a.r.l. 73

78 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements Ferrum Pension Management S.a.r.l., Luxembourg, Luxembourg, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIP- PING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as of 26 November Ärzteversorgung Westfalen-Lippe, Münster, Germany, notified us pursuant to Section 21 (1a) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as of 26 November The share of 3.67 % (5,000 voting rights) is attributed to Ärzteversorgung Westfalen- Lippe in accordance with Section 22 (1) sentence 1 no. 2 WpHG indirectly through the stake held by Ferrum Pension Management S.a.r.l. Norddeutsche Landesbank Girozentrale, Hannover, Germany, notified us that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 10 % as of 7 February Its share in the voting rights now comes to %. This share equals 11,965 voting rights. Sparkasse Vogtland, Plauen, Germany, notified us pursuant to Section 21 (1) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, exceeded the threshold of 3 % as of 20 June 2008 and now comes to 3.30 % (4,500 voting rights). HSH Nordbank AG, Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 20 % as of 5 August 2008 and came to % (26,942 voting rights) as of that day. The Free and Hanseatic City of Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG that its share in the voting rights of HCI HAMMONIA SHIPPING AG, Bleichenbrücke 10, Hamburg, exceeded the 3 %, 5 %, 10 %, and 15 % thresholds as of 25 June 2009 and now comes to % (26,481 of altogether 136,414 voting rights). All of these voting rights are attributed to the Free and Hanseatic City of Hamburg in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG by its following subsidiaries whose respective shares in voting rights equal 3 % or more: - HSH Finanzfonds AöR (parent of HSH Nordbank AG), - HSH Nordbank AG. The federal state of Schleswig-Holstein, Kiel, Germany, notified us pursuant to Section 21 (1) WpHG on 1 July 2009 that its share in the voting rights of HCI HAM- MONIA SHIPPING AG, Bleichenbrücke 10, Hamburg, exceeded the 3 %, 5 %, 10 %, and 15 % thresholds as of 25 June 2009 and now comes to % (26,481 of altogether 136,414 voting rights). All of these voting rights are attributed to the federal state of Schleswig- Holstein in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG by its following subsidiaries whose respective shares in voting rights equal 3 % or more: - HSH Finanzfonds AöR (parent of HSH Nordbank AG), - HSH Nordbank AG. HSH Finanzfonds AöR, Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG on 1 July 2009 that its share in the voting rights of HCI HAMMONIA SHIP- PING AG, Bleichenbrücke 10, Hamburg, exceeded the 3 %, 5 %, 10 %, and 15 % thresholds as of 25 June 2009 and now comes to % (26,481 of altogether 136,414 voting rights). All of these voting rights are attributed to HSH Finanzfonds AöR in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG by its following subsidiary whose share in voting rights equals 3 % or more: - HSH Nordbank AG. On 30 June 2009 HSH Finanzfonds AöR, Hamburg notified us pursuant to Section 21 (1) WpHG that ist share in the voting rights of HCI HAMMONIA SHIPPING AG comes to % (26,481 of altogether 136,414 voting rights) and that these voting rights are attributed through its subsidiary HSH Nordbank AG in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG. Against this backdrop, HSH Finanzfonds AöR also notified us of the following on 21 July pursuant to Section 27a (1) WpHG: 1. Objectives pursued with the acquisition: a) The acquisition of voting rights of HCI HAMMONIA SHIPPING AG took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. Hamburg-based HSH Finanzfonds AöR neither pursues strategic objectives nor aims for trading profits relating to the issuer. b) HSH Finanzfonds AöR does not intend to acquire further voting rights either through purchase or in any other way within the next twelve months. c) HSH Finanzfonds AöR does not intend to exert influence on the composition of the issuer s administrative, executive or supervisory boards. d) HSH Finanzfonds AöR does not aim for any material changes in the company s capital structure, particularly with respect to the relation of equity to borrowed capital or its dividend policy. 2. Origin of funds used for the acquisition: The acquisition of voting rights took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. Neither borrowed capital nor equity was used directly for the acquisition of voting rights of HCI HAMMONIA SHIPPING AG. On 1 July 2009 the federal state of Schleswig-Holstein, Kiel, notified us pursuant to Section 21 (1) WpHG that ist share in the voting rights of HCI HAMMONIA SHIP- PING AG comes to % (26,481 of altogether 136,414 voting rights) and that these voting rights are attributed 74

79 Consolidated Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 through its subsidiaries HSH Finanzfonds AöR and HSH Nordbank AG in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG. Against this backdrop, the federal state of Schleswig-Holstein also notified us of the following on 21 July pursuant to Section 27a (1) WpHG: 1. Objectives pursued with the acquisition: a) The acquisition of voting rights of HCI HAMMONIA SHIPPING AG took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. The federal state of Schleswig-Holstein neither pursues strategic objectives nor aims for trading profits relating to the issuer. b) The federal state of Schleswig-Holstein does not intend to acquire further voting rights either through purchase or in any other way within the next twelve months. c) The federal state of Schleswig-Holstein does not intend to exert influence on the composition of the issuer s administrative, executive or supervisory boards. d) The federal state of Schleswig-Holstein does not aim for any material changes in the company s capital structure, particularly with respect to the relation of equity to borrowed capital or its dividend policy. 2. Origin of funds used for the acquisition: The acquisition of voting rights took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. Neither borrowed capital nor equity was used directly for the acquisition of voting rights of HCI HAMMONIA SHIPPING AG. On 30 June 2009 the Free and Hanseatic City of Hamburg notified us pursuant to Section 21 (1) WpHG that ist share in the voting rights of HCI HAMMONIA SHIP- PING AG comes to % (26,481 of altogether 136,414 voting rights) and that these voting rights are attributed through its subsidiaries HSH Finanzfonds AöR and HSH Nordbank AG in accordance with Section 22 (1) sentence 1 no. 1, (3) WpHG. Against this backdrop, the Free and Hanseatic City of Hamburg also notified us of the following on 23 July pursuant to Section 27a (1) WpHG: 1. Objectives pursued with the acquisition: a) The acquisition of voting rights of HCI HAMMONIA SHIPPING AG took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. The Free and Hanseatic City of Hamburg neither pursues strategic objectives nor aims for trading profits relating to the issuer. b) The Free and Hanseatic City of Hamburg does not intend to acquire further voting rights either through purchase or in any other way within the next twelve months. c) The Free and Hanseatic City of Hamburg does not intend to exert influence on the composition of the issuer s administrative, executive or supervisory boards. d) The Free and Hanseatic City of Hamburg does not aim for any material changes in the company s capital structure, particularly with respect to the relation of equity to borrowed capital or its dividend policy. 2. Origin of funds used for the acquisition: The acquisition of voting rights took place merely by attribution of the shareholding of HSH Nordbank AG pursuant to Section 22 (1) sentence 1 no. 1, (3) WpHG. Neither borrowed capital nor equity was used directly for the acquisition of voting rights of HCI HAMMONIA SHIPPING AG. Sachsen-Finanzgruppe, Leipzig, Germany, notified us pursuant to Section 21 (1) WpHG that its share in our company s voting rights exceeded the 3 % threshold on 20 June 2008 and comes to 3.30 % (4,500 voting rights) as of that day % (4,500 voting rights) are attributed to Sachsen-Finanzgruppe in accordance with Section 22 (1) sentence 1 no. 1 WpHG. The attributed voting rights are held by the following company whose share in the voting rights of HCI HAMMONIA SHIPPING AG equals 3 % or more and which is controlled by Sachsen-Finanzgruppe: Sparkasse Vogtland. (49) Subsequent events Due to the continuing weak revenues from the pool arrangements, negotiations about deferments of redemption payments are currently underway with some of the financing banks. Since the fourth quarter 2009, no redemption payments have been made for the ships MS SAXONIA and MS WESTPHALIA. These deferments of payment are tolerated by the banks. Negotiations have not come to a final result yet. For the 2,500 TEU ships of HCI HAMMONIA SHIPPING AG, the company has also carried on negotiations about debt repayment extensions with the financing banks since the beginning of On the basis of a positive as well as a negative revenue scenario, we assume that the operating expenses and interest will be covered by regular pool revenues. The negotiations have not led to a final result yet. No other events of special significance have occurred between the end of the year 2009 and the reporting date that might have material effects on the consolidated financial statements. (50) Exemption pursuant to Section 264b HGB The exemption provided under Section 264b HGB (Commercial Code) with respect to the disclosure of financial statements has been made use of for the following consolidated subsidiaries: - MS HAMMONIA TEUTONICA Schiffahrts GmbH & Co. KG - MS HAMMONIA ROMA Schiffahrts GmbH & Co. KG 75

80 HCI HAMMONIA SHIPPING AG Annual Report 2009 Consolidated Financial Statements - MS HAMMONIA MASSILIA Schiffahrts GmbH & Co. KG - MS HAMMONIA HOLSATIA Schiffahrts GmbH & Co. KG - MS HAMMONIA POMERENIA Schiffahrts GmbH & Co. KG - MS HAMMONIA BAVARIA Schiffahrts GmbH & Co. KG - MS WESTPHALIA Schiffahrts GmbH & Co. KG Responsibility statement To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the profit / loss, financial position and assets and liabilities of the group, and the consolidated management report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the group s probable development. Hamburg, 15 April 2010 HCI HAMMONIA SHIPPING AG - MS SAXONIA Schiffahrts GmbH & Co. KG - MS HAMMONIA FIONIA Schiffahrts GmbH & Co. KG - MS HAMMONIA HAFNIA Schiffahrts GmbH & Co. KG - MS HAMMONIA DANIA Schiffahrts GmbH & Co. KG Dr. Karsten Liebing Management Board Jan Krutemeier Management Board (51) List of shareholdings in accordance with Section 313 (2) through (4) HGB The list of shareholdings of HCI HAMMONIA SHIPPING AG and the group as of 31 December 2009 is published in the electronic Federal Gazette (elektronischer Bundesanzeiger) in accordance with Sections 287, 313 HGB. The consolidated financial statements were prepared by the Management Board as of 15 April 2010 and thus released to be submitted to the Supervisory Board. The consolidated financial statements will be submitted to the Supervisory Board for approval at the Supervisory Board meeting held on 22 April Hamburg, 15 April 2010 HCI HAMMONIA SHIPPING AG Dr. Karsten Liebing Management Board Jan Krutemeier Management Board 76

81 Auditor s Report HCI HAMMONIA SHIPPING AG Annual Report 2009 Auditor s Report We have audited the consolidated financial statements prepared by the HCI HAMMONIA SHIPPING AG, Hamburg, comprising the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows and the notes to the consolidated financial statements, together with the group management report for the business year from January 1 to December 31, The preparation of the consolidated financial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB [Handelsgesetzbuch German Commercial Code ] and supplementary provisions of the articles of incorporation are the responsibility of the parent company s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB and supplementary provisions of the articles of incorporation and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group s position and suitably presents the opportunities and risks of future development. Hamburg, 15 April 2010 HANSA PARTNER GmbH Wirtschaftsprüfungsgesellschaft We conducted our audit of the consolidated financial statements in accordance with 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the frame-work of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Dr. Tecklenburg Auditor Arp Auditor 77

82 HCI HAMMONIA SHIPPING AG Annual Report BELGICA 2,500 TEU container ship, operated in the Peter Döhle 2,500 TEU pool

83 Annual Financial Statements HCI HAMMONIA SHIPPING AG Annual Report Annual Financial Statements Income statement EUR Revenues 132, , Other operating income 37, , Depreciation and amortization of intangible assets property, plant and equipment 4, , Other operating expenses 2,553, ,448, Income from investments 5,419, ,768, Other interest income and similar income 93, ,163, Depreciation on investments 5,184, Net loss / PY: Net income./. 2,059, ,719, Profit carry-forward / PY: Loss carry-forward 2,155, /. 3,830, Allocation to surplus reserves , Retained earnings 96, ,884,

84 HCI HAMMONIA SHIPPING AG Annual Report 2009 Annual Financial Statements Balance sheet Assets EUR 31 / 12 / / 12 / 2008 A. Non-current assets I. Intangible assets Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets 4, , II. Financial assets Investments in affiliated companies 137,720, ,110, B. Current assets I. Receivables and other assets 1. Receivables from affiliated companies 8,633, ,991, Other assets 508, ,142, , II. Balances at banks 1,137, ,884, C. Accruals and deferrals 2,333, , ,338, ,178, Equity and Liabilities EUR 31 / 12 / / 12 / 2008 A. Equity I. Subscribed capital 136,414, ,414, II. Capital reserve 13,636, ,636, III. Surplus reserves Statutory reserve 5, , IV. Retained earnings 96, ,884, ,151, ,939, B. Provisions Other provisions 160, , C. Liabilities Trade payables 26, , ,338, ,178,

85 Annual Financial Statements HCI HAMMONIA SHIPPING AG Annual Report 2009 Development of non-current assets Acquisition and production cost EUR 1 / 01 / 2009 Additions Disposals 31 / 12 / 2009 I. Intangible assets Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets II. Financial assets 14, , Investments in affiliated companies 137,110, ,211, ,416, ,904, ,124, ,211, ,416, ,918, Accumulated depreciation and amortization EUR 1 / 01 / 2009 Additions Disposals 31 / 12 / 2009 I. Intangible assets Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets II. Financial assets 5, , , Investments in affiliated companies ,184, ,184, , ,188, ,194, Carrying amount EUR 31 / 12 / / 12 / 2009 I. Intangible assets Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets II. Financial assets 8, ,53 Investments in affiliated companies 137,110, ,720, ,119, ,724,

86 HCI HAMMONIA SHIPPING AG Annual Report 2009 Annual Financial Statements Statement of share property as of 31 December 2009 Company Registered officce Equityin EUR Interest- % Result 2009 EUR MS HAMMONIA POMERENIA Schiffahrts GmbH & Co. KG MS SAXONIA Schiffahrts GmbH & Co. KG MS WESTPHALIA Schiffahrts GmbH & Co. KG MS HAMMONIA ROMA Schiffahrtsgesellschaft mbh + Co. KG MS HAMMONIA HOLSATIA Schiffahrtsgesellschaft mbh + Co. KG MS HAMMONIA TEUTONICA Schiffahrtsgesellschaft mbh + Co. KG MS HAMMONIA MASSILIA Schiffahrtsgesellschaft mbh + Co. KG MS HAMMONIA BAVARIA Schiffahrts-GmbH + Co. KG MS HAMMONIA FIONIA Schiffahrts-GmbH + Co. KG MS HAMMONIA HAFNIA Schiffahrts-GmbH + Co. KG MS HAMMONIA DANIA Schiffahrts-GmbH + Co. KG Verwaltung HCI HAMMONIA Schiffahrts GmbH Hamburg Hamburg 10,490, % - 2,178, Hamburg 10,678, % - 3,387, Hamburg 10,901, % - 658, Hamburg 10,570, % - 217, Hamburg 10,717, % - 198, Hamburg 10,807, % - 175, Hamburg 11,372, % - 299, Hamburg 18,285, % 466, Hamburg 20,790, % 2,397, Hamburg 19,619, % 2,280, Hamburg 79, % 23,

87 Supervisory Board Report HCI HAMMONIA SHIPPING AG Annual Report Supervisory Board Report Dear shareholders, with the delivery of the 2,500 TEU ships HAMMONIA BA- VARIA and HAMMONIA ROMA, the final two ordered ships were put successfully in service in January Due to the challenging market in the container shipping industry we are glad that all ships of HCI HAMMONIA SHIPPING AG were being operated in the year All vessels are in technically sound condition. In order to respond to falling pool revenues, a program for the reduction of vessel operating costs was implemented in the year In the Supervisory Board meeting of 9 December 2009, Jan Krutemeier was appointed new member of the Management Board in succession of Jens Burgemeister, who stepped down from the board as of the end of the year. The Supervisory Board has three members: Werner Berg (chairman), Michael Hummel, and Andreas Uibeleisen. The Supervisory Board advised the Management Board with regard to all issues of relevance and supervised its governance of the company in fiscal year The Supervisory Board informed itself promptly and comprehensively about the company s economic development and financial situation. Management Board and Supervisory Board discussed the corporate planning for the medium term together. The chairman of the Supervisory Board continuously maintained close contact with the Management Board even outside the regular sessions. The Supervisory Board convened in four meetings in the past fiscal year. The key issues debated in these meetings were: - Adoption of the financial statements and the management report as well as the consolidated financial statements and the consolidated management report for the year 2008; - assessment of the development of pool revenues against the backdrop of a continuin weakness of the container market; - issues of corporate governance and release of a joint declaration of compliance in accordance with Section 161 AktG together with the Management Board; - budget planning for the years 2009 and HANSA PARTNER GmbH Wirtschaftsprüfungsgesellschaft, Kehrwieder 11, Hamburg, was elected auditor and group auditor for fiscal year 2009 by shareholders resolution. The auditing firm audited the financial statements and the management report of HCI HAMMO- NIA SHIPPING AG as of 31 December 2009 according to HGB as well as the consolidated financial statements and the consolidated management report as of 31 December 2009 according to IFRS / IAS including respective accounting and issued an unqualified auditor s certificate. The Supervisory Board approved the result of the audit and the auditing firm s issue of the certificate, and it approved of the auditor s reports on the financial statements and consolidated financial statements. In its meeting of 22 April 2010, the Supervisory Board approved of the annual accounting documents prepared by the Management Board for HCI HAMMONIA SHIPPING AG and the group. The annual financial statements were thus deemed adopted. The Supervisory Board thanks the Management Board and everyone else involved in the company s development for their commitment in the year 2009 that was marked by the economic crisis. Hamburg, 22 April adoption of the interim financial statements for the first half-year 2009; - the subsidiaries risk management; following the market developments on the shipping markets and assessing the effects on the company; Werner Berg Chairman of the Supervisory Board - discussion and determination of the dividend for the year 2008; - preparation and performance of the Annual General Meeting 2009 and its resolution proposals; 83

88 HCI HAMMONIA SHIPPING AG Annual Report POLONIA (charter name Libra Rio) 3,100 TEU container ship, operated in the Peter Döhle 3,100 TEU pool